Category: Individual Tax Planning
Posted: November 2021
The Advance Child Tax Credit has generated questions for parents. Take some time to better understand what impact this advance could have on your 2021 personal tax return.
Advance Child Tax Credit payments are not like the Federal stimulus checks that didn’t count as income.
The monthly pay-ments by direct deposit (or mail) for qualifying families are an advance on the tax credit that would be included on your 2021 personal tax return (due April 15, 2022). This may add up to half the child tax credit on your return.
Check the IRS portal by clicking on the Child Tax Credit (CTC) tile on the irs.gov homepage.
You can login to view if you qualify and how much money you’ll receive. You can update key information including your address, bank account, number of children (including a 2021 birth or adoption), change of marital status and change of income. You can even opt out of receiving future advance child tax credit payments.
Why opt out?
With the CTC payments you are essentially borrowing from yourself – up to half the credit you would have on your 2021 return. For some parents, the advance payments are not needed and full credit on their 2021 return is preferred. If you have concerns or questions on what impact CTC payments could have on your 2021 return, feel free to contact a Mierendorf representative.
Keep a record of when CTC payments were received, how (direct deposit, paper check or debit card), and the amounts.
In January 2022, watch your mail for IRS letter 6419 for the total amount of advance CTC payments disbursed in 2021. Include this letter and your payments records with your tax organizer for tax preparation.
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