Starting this week, many families in Missouri and across the country will begin receiving deposits in your bank account or checks in the mail from the IRS. These payments are an advance of the Child …
Starting this week, many families in Missouri and across the country will begin receiving deposits in your bank account or checks in the mail from the IRS. These payments are an advance of the Child Tax Credit that most families receive in their tax returns after filing each spring. So, if you have children under the age of 18 don’t be surprised when it arrives. Because it’s nearly impossible to keep up with all of the changes and new programs coming out of Washington, D.C. – particularly while wrangling kids everyday – hopefully this will clear up any potential confusion.
As part of the American Rescue Plan which was signed into law at the beginning of the year, the Child Tax Credit has been expanded and the IRS was to begin releasing payments in in- crements starting July 15th. Half of the total credit amount will
be paid in advance monthly payments. The other half should be claimed on 2021 income tax filings next spring. To be clear, this is money you would already be getting back from the IRS in your tax return. This new law sends the money early and in installments, meaning tax returns for eligibility families next spring could be a little lower than expected.
Families making less than $150,000 and single parents making less than $112,500 qualify for the additional 2021 Child Tax Credit amounts. The credit amount for each child under age 6 is $3,600. The amount varies from $2,000 to $3,000 for children ages 6-17. Payments will come in installments of $300 per child under age 6 and $250 per child ages 6-17. Families will receive the remainder of the credit when filing taxes next year. Individuals who usually receive their refunds from the IRS through direct deposit will
get their payments in their bank account on the 15th of every month until the end of 2021. People who don’t use direct deposit will receive their payment by mail around the same time.
Full disclosure: I did not support this change, and I voted against the bill it was in. It causes confusion for families and creates unnecessary difficulties the IRS cannot handle. The IRS is still so far behind in processing tax returns and we have countless people still waiting for their 2019 returns, let alone 2020. And the IRS is using information from 2020 returns to determine these payments. So for families who have experienced a life change in the last year like having more children or a change in salary, for example, or you have not received your 2020 tax return, opting out might be a good option – which you can do. Again, you wouldn’t be losing any money. It would all be included in your 2021 tax return next year. Opting out could also help you avoid having to backpay some or all of your tax credit on 2021 tax returns. For more information about the new changes or to opt out please visit the Child Tax Credit Update Portal at https:// www.irs.gov/credits-deductions/ child-tax-credit-update-portal.
Regardless of my views on the new law, it is up to each family to decide what works best for you. A lot of people can put the early payments to good use, while others may prefer to handle all tax matters as they always have. Either way, my office is available to provide as much information as possible and help you navigate the new changes.
No comments on this item Please log in to comment by clicking here