New Child Tax Credit

Here is some information on the new advance monthly payments of the child tax credit. It requires the IRS to make advance payments of the credit each month to qualifying families. The advance payments will account for half of a family’s 2021 child tax credit. The IRS will issue these monthly payments to eligible families on July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

The IRS will base eligibility for the payments on 2020 or 2019 returns. The agency has started sending letters to more than 36 million families that it believes are eligible for the advance child credit payment. The letters are generally for informational purposes. The IRS plans to send a second round of letters this summer, and that latter mailing list the family’s estimated monthly payment. Want to opt out of monthly payments? The IRS has an online tool for this. You will need a photo ID to use the Service’s Child  Tax Credit Update Portal. See www.irs.gov/childcredit2021 for FAQ and other details on the child credit.

Taxpayers who generally don’t file returns can get child credit payments. But they’ll have to first jump through some hoops. The IRS has options for those not required to file a return for 2019 or 2020 because their income was below the filing threshold. It has an online tool called the Non-Filer Sign-Up Tool, which it hopes most non filers will use. Alternatively, the agency issued procedures for filing simplified returns for 2020. Note that people who used the IRS’s online tool for nonfilers in 2020 to provide information to the IRS for the purpose of qualifying for stimulus payments don’t have to do anything because the IRS already has their data.

Small Business Tax Strategies

July 2021