Since Covid-19 was declared a pandemic on March 11, 2020, by the World Health Organization, the United States government has made efforts to help individuals and businesses. On July 15, the IRS will start sending out the advanced payments of the child tax credit from the American Rescue Plan to eligible families. The Advanced Child Tax Credit payments will be estimated from their already filed 2020 tax return. According to the IRS, roughly 39 million households covering 88% of children in the United States will receive the payments.
The expanded child tax credit is a modification of the regular child tax credit with these specific changes:
On May 17, 2021, the IRS and the U.S. Department of the Treasury announced that payments begin on July 15, 2021. Eligible families will receive payments of:
The processing of these payments will fall on the 15th of each month until the last month of 2021. The 15th will change if it falls on the weekend or is a holiday. In this case, you will receive your payment the next business day.
These payments represent half of the total amount, taxpayers will receive the remaining balance when filling their 2021 tax return.
There is the possibility of overpayment or underpayment. Taxpayers will need to correct their payments when they file their 2021 tax returns.
Taxpayers with adjusted gross income below the following levels will qualify for the total monthly payment:
Above these AGIs, the extra amount above the original $2,000 credit is reduced by $50 for every $1,000 in modified AGI.
Households eligible for the Child Tax Credit payments will automatically receive their monthly payments through direct deposit, paper check, or debit cards. Most taxpayers will not be required to take any action to receive their payments. All families need to know that Child Tax Credit payments are sent based on what information the IRS has on file for each qualifying taxpayer. The IRS continues its efforts to make more families aware of their eligibility and take appropriate actions.
If you did not file a return, you need to contact a tax professional to help you take steps to receive the advanced monthly Child Tax credit payments. You can also visit the Child Tax Credit update portal for more information.
You may also call us to discuss any tax problem , payroll reporting or business accounting issues you may have and we’ll let you know how we can help you.