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  • Advance Child Tax Credit Payments Start This Month

    Advance Child Tax Credit Payments - RBSK PartnersThe Internal Revenue Service has started sending letters to more than 36 million American families who, based on tax returns filed with the agency, may be eligible to receive monthly Child Tax Credit payments starting July 15, 2021.

    Here's what families need to know:

    Background

    Families who are eligible for advance Child Tax Credit payments will receive a personalized letter listing an estimate of their monthly payment, which begins, today, July 15.

    Most families do not need to take any action to get their payment. Normally, the IRS will calculate the payment amount based on the 2020 tax return. If that return is not available, either because it has not yet been filed or has not yet been processed, the IRS will instead determine the payment amount using the 2019 return.

    Eligible families will begin receiving advance payments, either by direct deposit or check. The payment will be up to $300 per month for each qualifying child under age 6 and up to $250 per month for each qualifying child ages 6 to 17. The IRS will issue advance Child Tax Credit payments on:

    • July 15,

    • August 13,

    • September 15,

    • October 15,

    • November 15, and

    • December 15.

    Additional Tools and Online Resources

    Throughout the summer, the IRS will be adding additional tools and online resources to help with the advance Child Tax Credit. One of these tools will enable families to unenroll from receiving these advance payments and receive the full amount of the credit when they file their 2021 return next year instead.

    Other useful new online tools, include:

    • An interactive Child Tax Credit eligibility tool to help families determine whether they qualify for the Advance Child Tax Credit payments.

    • Another tool, the Child Tax Credit Update Portal, will initially enable anyone who has been determined to be eligible for advance payments to unenroll or opt-out of the advance payment program. Later this year, it will allow people to check on the status of their payments, make updates to their information, and be available in Spanish. More details will be available soon about the online Child Tax Credit Update Portal.

    Why Would You Want to Unenroll?

    There are a few reasons you may want to consider unenrolling or opting out of the advance payments, including:

    • You'd rather have one large payment in 2022 instead of smaller payments spanning 2021-2022. 
    • You know your household circumstances or tax situation will change at some point this year and don't want to deal with having to update your information in the portal.
    • You're concerned the IRS might send you an overpayment based on old tax information, and you don't want to worry about paying that money back.
      • That could be the case if your household income goes up or if a dependent ages out of an age bracket before the end of 2021. 
    • Your income in 2021 is too high to qualify for the credit.
    • Someone else (an ex-spouse or another family member) qualifies to claim your child or children as dependents in 2021.
    • Your main home was outside of the United States for more than half of 2021.

    Unenroll Options You May Want to Consider:

    If you believe you may want to unenroll, we have two recommended steps to take:

    1.  Schedule a time to speak with your trusted RBSK advisor here
    2.  Access the Child Tax Credit Update Portal to unenroll.
      • You must first verify your identity. If you have an existing IRS username or an ID.me account with a verified identity, you can use those accounts to sign in.
      • If you do not have an existing account, you will be asked to verify your identity with a form of photo identification using ID.me, a trusted third party for the IRS. 

    Child Tax Credit Changes

    The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for qualifying children under the age of 6 and to $3,000 per child for qualifying children between ages 6 and 17. Before 2021, the credit was worth up to $2,000 per eligible child, and 17 year-olds were not considered as qualifying children for the credit.

    The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:

    • $75,000 or less for singles,
    • $112,500 or less for heads of household, and
    • $150,000 or less for married couples filing a joint return and qualified widows and widowers.

    For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every extra $1,000 in modified AGI.

    In addition, the entire credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.

    Watch Out for Scams

    As always, everyone should be on the lookout for scams related to both Advance Child Tax Credit payments and Economic Impact Payments. The only way to get either of these benefits is by either filing a tax return with the IRS or by registering online through the Non-filer Sign-up tool, exclusively on IRS.gov. Any other option is a scam.

    Be sure to watch out for scams using email, phone calls, or texts related to the payments. Remember: The IRS never sends unsolicited electronic communications asking anyone to open attachments or visit a non-governmental website.

    Help is Just a Phone Call Away

    Don't hesitate to contact us for the most up-to-date information on the Child Tax Credit and advance payments.


    07/15/2021




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