Search

Monthly Payments of the 2021 Child Tax Credit Will Begin in July - Kiplinger's Personal Finance

guduka.blogspot.com

The American Rescue Plan  offers American families a bigger and better child tax credit for 2021. For this year only, the credit amount for many families is increased from $2,000 per child to $3,000 per kid ($3,600 for children under age six), 17-year-olds qualify, and the credit is fully refundable.

One additional major element of the new child tax credit regime requires the IRS to make advance payments of the credit to qualifying families in 2021. The IRS will base eligibility for the credit and advance payments, and calculate the amount of the advance payment, based on previously filed tax returns. It will first look to your 2020 return, and if a 2020 return has not yet been filed, the IRS will look to your 2019 return. The advance payments will account for half of a family's 2021 child tax credit. The amount a family receives each month will vary based on the number of children in the family, the ages of the kids and the amount of the family's adjusted gross income. Families who qualify for the full $3,000 or $3,600 credit could see checks of $250 or $300 per child for six months. Families with higher incomes who qualify for the $2,000 credit will get monthly payments of $167 per child for six months. (Calculate your monthly payment using Kiplinger's 2021 Child Tax Credit Calculator.)

The American Rescue Plan also requires the IRS to develop an online portal so that you can update your income, marital status and the number of qualifying children. So, if your circumstances change in 2021 from your last filed federal tax return, and you believe those changes could affect the amount of your child credit for 2021, you would be able to go onto that portal once it is up and running and update it for the correct information. Also, people who want to opt out of the advance payments and instead take the full child credit on their 2021 return could do so through that same online portal.

IRS Commissioner Charles Rettig said today in testimony before Congress that the IRS fully expects to launch the portal by July 1 as required under the law, with advance payments going out on a monthly basis to eligible families beginning in July. That means many families who qualify for the child tax credit should receive six payments in 2021, one each month from July through December. This is very good news because just last month Rettig warned that the IRS might not be able to have the portal set up in time and that sending monthly payments out would be difficult. Rettig acknowledged today that the IRS is not historically an agency that is used to sending out periodic payments and that there is a lot of work still to be done in creating this huge undertaking. He estimates that a minimum of 300 to 500 agency employees will be involved in the program. He also said that, though the online portal will be launched by July 1, it is sure to need future enhancements and adjustments as taxpayers begin to enter data into the tool. In other words, don't be surprised to see snags, at least in the beginning.

Challenges still lie ahead for the agency in implementing the program. The IRS will have to build a system to compute and recompute payments as people provide new information into the portal. The system must also be able to issue and track payments, as well as reconcile the payments with the taxpayer's credit taken on the tax returns. Additionally, one major issue that the IRS will need to deal with is how to minimize the potential for fraud when it comes to refundable child tax credits. For example, the IRS estimates that in 2019 it improperly paid $7.2 billion in such refundable credits. Rettig appeared to agree that there was an element of risk for increased fraud in the new child tax credit program.

For more information on this year's child tax credit, see Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs.

Let's block ads! (Why?)



"payment" - Google News
April 14, 2021 at 04:52AM
https://ift.tt/3a8MR2A

Monthly Payments of the 2021 Child Tax Credit Will Begin in July - Kiplinger's Personal Finance
"payment" - Google News
https://ift.tt/3bV4HFe
https://ift.tt/2VYfp89

Bagikan Berita Ini

0 Response to "Monthly Payments of the 2021 Child Tax Credit Will Begin in July - Kiplinger's Personal Finance"

Post a Comment

Powered by Blogger.