Guest Blog by Amy Iannone of Pro Books and Taxes
There was so good chatter in our community today about the Child Tax Credits that are hitting bank accounts. Thankfully, we have some smart professionals in our community willing to share their knowledge. Amy Iannone of Pro Books and Taxes shared some information and helpful resources.
What is this money and why am I receiving it?
With the HEROES (Health & Economic Recovery Omnibus Emergency Solutions) Act, the Child Tax Credit was increased from $2,000 to $3,600 for children under 6 years old and $3,000 for children age 6-17 (based on their age on 12/31/21).
The CTC is a refundable credit and is usually only applied when you file your tax return. However, the HEROES Act stated that families with eligible dependents will receive HALF OF THE CREDIT IN ADVANCE starting in July with payments automatically as a type of stimulus for families.
This credit will be paid out in equally in monthly payments instead of one lump sum. each month from July 2021 through December 2021.
Do the math Amy
Birth up to 6 years would get a $3,600 credit – half paid in advance of $1,800 would make six payments of $300
Ages 6 through a day before 18th birthday would get $3,000 credit – half paid in advance of $1,500 would make six payments of $250
If you get your tax refunds via direct deposit, the money should be in your bank account on the 15th day of each month or a check in the mail.
The other half will be provided as a credit on your 2021 tax return in the 2022 tax season.
What if I want to opt out?
You can opt out, but it’s a PITA because you have to verify online which can be a problem for some folks. I would highly recommend not opting out unless you 100% know that you should not be receiving them and save the money just in case you need the credit to pay a large tax liability. It depends on your tax situation.
If you wish to unenroll, here’s the link: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
Keep all receipts and records
Your tax preparer will ask you how much you received on the credit so that they know how to prepare your return and may not have access to the information. Keep all your receipts and notices so that you can communicate accurately to them.
Reach out via Amy’s website if you would like to have a deeper conversation with Amy!