In March of this year, there were some Child Tax Credit changes, as part of the American Rescue Plan. Many taxpayers have questions about the changes and how it might benefit them.
Will it benefit everyone?
Not necessarily. The amount has increased for certain taxpayers.
Can I receive it even if I don’t owe the IRS?
Yes. It is fully refundable.
How will I receive the payments?
May be partially received in monthly payments. Beginning July 15, the IRS will pay half the credit in the form of advance monthly payments. Taxpayers will then claim the other half when they file their 2021 income tax return.
How will the advanced child tax credit affect my refund?
Though these tax changes are temporary and only apply to the 2021 tax year, they may present important cashflow and financial planning opportunities today. It is also important to note that the monthly advance of the child tax credit is a significant change. The credit is normally part of your income tax return and would reduce your tax liability. To avoid any surprises, please contact our office.
What are the qualifications and how much should I expect?
The child tax credit and advance payments are based on several factors, including the age of your children, income and past filing status. Our team at Anderson, Adkins & Company are well versed on how these different factors can affect the amount you may be eligible to receive.
What if I have changes to my filing status?
Using the IRS’s child tax credit and update portal, taxpayers can update their information to reflect any new information that might impact their child tax credit amount, such as filing status or number of children. Parents may also use the online portal to elect out of the advance payments or check on the status of payments. The IRS also has a non-filer portal to use for certain situations.
Let us help you.
With any tax law change, it’s important to revisit your full financial roadmap. We can help you determine how much credit you may be entitled to and whether advance payments are appropriate. How you choose to receive the credit (partially advanced via monthly payments or solely on your next year’s return) could have many impacts to your financial plans.
Please contact our office today at 706-288-2000 to discuss your specific situation and learn about changes made to the child tax credit. As always, planning ahead can help you maximize your family’s financial situation and position you for greater success.