Fast Facts for June 7, 2021
Check your mail. And pay attention … the IRS just dropped new information about the monthly child tax credit and the portal you can use to opt-out and change information.
I know you all have a lot of questions – please – watch the whole video before you ask, because I’m pretty sure I’m going to answer almost all of them.
I’m going to cover, six main topics: information you’re going to receive from the IRS, how the payment will be calculated, what this means for your tax return, how do you opt out and change information, who qualifies, some helpful tips and most importantly the website for the IRS portal so you can input your information. In that order.
The IRS has already started sending letters to 36 million of you who have been identified as having qualifying children. After you receive this first letter, you’ll get a second, more personalized letter from the IRS telling you what your estimated monthly payment will be.
Though this new child tax credit is for the 2021 taxable year, if you qualify, at least initially, the IRS will calculate your monthly payment amount on your 2020 tax return, if that return has not been filed or processed, the IRS will determine your payment amount based on your 2019 return. Those monthly payments will be in the amount of either 3-hundred dollars a month or 250-dollars a month. Qualified parents will receive this either by direct deposit or paper check, depending on the payment information the IRS has for you on file.
If you want the monthly payments that means you’re choosing to take half of your child tax credit as an advance. And using simple math – that means you will only receive the other half at tax time in 2022 *not* another full amount. Those monthly payments will go out on the 15th of the month from July to December of 2021*only*. This monthly option will *not* happen in 2022, unless congress passes a new law.
If you want to opt out of the monthly payments the IRS says – for those who have been identified already as qualified – you will be able to use a portal that will give you that option. Eventually – but not initially — the portal will allow qualified taxpayers to make changes in their income, filing status, or number of qualifying children; update their direct deposit information; among other things.
To get these monthly payments, you have to qualify financially and your child has to be the right age. If you file single and make less than $75000, head of household and make less than $112,500 dollars or married and make less than $150,000 you financially qualify. If your child is no older than the age of 5 at the end of 2021 you will qualify for $3600 dollars. If your child is no older than the age of 17 at the end of 2021 you will qualify for $3000 dollars. That’s it. If doesn’t matter if your child is still in high school or if they aged out of either bracket at any point in 2021. They don’t qualify.
Here are some extra helpful tips — if you want these monthly payments it would be in your best interest to get your 2020 tax return filed, yesterday. Make sure you understand what the monthly option means to your tax refund. Do the math, if you take the monthly option, that means you’ll only get half of the child tax credit at tax time. Make sure – when its available on the portal, that you input your proper income amount so actually qualify for it in 2021 and you don’t owe any of this money back to the government at tax time. The portal will also, eventually give you a tool that will help you determine if you’re eligible for this monthly child tax credit.
It is *not* up yet. But when it goes up, the portal will be available at irs.gov/childtaxcredit2021
More info here.
