{"id":1597,"date":"2021-08-05T13:53:01","date_gmt":"2021-08-05T17:53:01","guid":{"rendered":"https:\/\/thevoiceoflakewood.com\/?p=1597"},"modified":"2021-08-05T13:53:02","modified_gmt":"2021-08-05T17:53:02","slug":"advance-child-tax-credit","status":"publish","type":"post","link":"https:\/\/thevoiceoflakewood.com\/advance-child-tax-credit\/","title":{"rendered":"Advance Child Tax Credit"},"content":{"rendered":"\n

Q&A with Menachem Abraham of Oscar Abraham CPA<\/strong><\/p>\n\n\n\n

Question<\/strong><\/p>\n\n\n\n

I opened my online bank statement the other day and was surprised to find an extra few hundred dollars deposited there. Was this another stimulus check? A late rebate? An early tax return?<\/p>\n\n\n\n

Answer<\/strong><\/p>\n\n\n\n

Americans across the country have gotten used to receiving small federal windfalls ever since the pandemic started, and many have stopped wondering about the reasons behind them.<\/p>\n\n\n\n

The most recent payments that many of us have been receiving are from the Advance Child Tax Credit. Here are some facts and figures that you should know regarding the ACTC.<\/p>\n\n\n\n

The child tax credit underwent a few big changes this year, and it is important to understand how these modifications affect you.<\/p>\n\n\n\n

In the past, the child tax credit was awarded to taxpayers for each child under the age of 17. The amount given was $2,000, which parents got as credit against their taxes. However, if a family did not have to pay the full child tax credit\u2019s worth of taxes, the money was awarded as a refundable amount instead. Say you had six children younger than 17 and you had to pay $4,000 in taxes, your child tax credit exceeded your actual tax amount, so you would have been awarded the remaining CTC as a refund. In the past, this refund was limited to $1,400 per child and a certain percentage of the family\u2019s income.<\/p>\n\n\n\n

This year, US citizens are receiving half a year\u2019s worth of payments in advance for the CTC of 2021. The IRS is estimating the value of each household\u2019s child tax credits based on 2020 and\/or 2019 tax filing and is depositing half of the amount over the next 12 months into families\u2019 bank accounts.<\/p>\n\n\n\n

For lower-income families, the 2021 ACTC changes are extremely impactful.<\/p>\n\n\n\n

This year, the amount limitations do not apply, so even if you pay a low tax rate, you will be able to redeem the full child tax credit value. Additionally, the CTC amount was changed from $2,000 per child to $3,000 for each child between the ages of six and 17, and $2,600 for each child under age six.<\/p>\n\n\n\n

It is important to note that these changes only apply to households earning less than $150,000 annually. For higher-income families, the CTC laws and limitations are the same as last year.<\/p>\n\n\n\n

The Advance Child Credit webpage can be used to add your account information and, for those who do not file taxes, use the non-filers tool to verify whether you are eligible for the ACTC. (Be careful not to make use of the non-filers method if you plan to file taxes this year, as it can cause problems later on, when you attempt to do so.)<\/p>\n\n\n\n

Another important feature on the IRS website is the option to un-enroll from the advance CTC payments. For some, this is a wise move, and they should make this change as soon as they can. While for lower-income adults the ACTC is profitable, for anyone making $150,000 or more, it is advisable to opt out of the ACTC payments and wait until tax season to receive the credit. The IRS will make a detailed accounting at the end of the year, and anyone who received more money from the ACTC than they should have\u2014for example, due to their income being higher than $150,000\u2014will be expected to return the surplus. This issue is most likely to come up for those whose yearly salary increased from below $150,000 to above that amount during 2021, because the IRS estimation is based on previous years\u2019 taxes.<\/p>\n\n\n\n

On the other hand, if you are making less than $150,000 annually, it is probably best to stay enrolled. Although the amount being given is very high, you will still have another six months\u2019 worth of CTC payments waiting for you at the close of 2021.<\/p>\n\n\n\n

In Summary<\/strong><\/p>\n\n\n\n