The American Rescue Plan Act was designed to help the United States recover in the wake of the COVID-19 pandemic. Similarly, the Child Tax Credit is to help American taxpayers have a break on their taxes to give them a credit per child. The two programs will help families with children stay above the poverty line.
The tax credit for qualifying children under 18 is $3000, and the credit for children under 6 is $3600. The child must still be within those thresholds at the end of 2021 to qualify. A child turning 18 before the end of 2021 is not eligible; similarly, a child turning 7 during 2021 is only eligible for the $3000 payment.
Does the Tax Credit Need to be Repaid?
Like the stimulus checks issued in 2020 and 2021, the tax credit will not need to be paid back on American taxes. If taxpayers do not receive the credit by the time, they are filing their taxes, they will need to fill out a separate form on their taxes to ensure they receive the credit payment.
The credits will be paid out with any refunds owed. If the taxpayer owes in taxes, the credit will help instead offset what tax is owed.
For taxpayers that have already submitted their taxes, they should not need to do anything else. The payments are designed to be automatic.
Exceptions to this are if taxpayers did not provide bank account information to receive a direct deposit of their taxes. Without that, the payments might get delayed.
Alternatively, if taxpayers have not filed their taxes for 2019 or 2020 yet and are required to, they should do so as soon as possible to help get the Tax credit payments.
Not Filing Taxes
For parents who were not required to file taxes for 2020 or similarly will not be required to file taxes for 2021, the IRS has established a non-filer signup tool where they can input their information and have the payments sent directly to their bank accounts starting July 2021.
The tool is called the Child Tax Credit Non-Filer Signup Tool and can be reached at the IRS’s website.
In any case, taxpayers can make an ID.me account which will enable them to access their IRS information, manage banking information, register as a non-filer, and adjust the payment schedule between one lump sum, or smaller monthly payments.
The monthly payment schedule is as follows:
- July 15, 2021
- August 13, 2021
- September 15, 2021
- October 15, 2021
- November 15, 2021
- December 15, 2021
Customized Tax Preparation Help
We’d love to sit down and talk about your tax situation and how you can protect as much of your income as possible – legally, ethically, and responsibly.
If you’d like personalized help for navigating the often-confusing tax situation post-coronavirus, please don’t hesitate Robert Hall & Associates at your earliest convenience via the webform here, by phone at 818-452-2641 or reach me directly via email at [email protected]