IRS sends out letters about the new Child Tax Credit


More than 36 million families will receive letters from the Internal Revenue Service about monthly Child Tax Credit payments from July through December.

The American Rescue Plan, signed into law March 11, made temporary changes to the tax credit, such as offering more money to those who qualify and making the credit available for qualifying children who turn 17 in 2021.

Another important change: Families can get money soon – instead of waiting until next year.

Child tax credit:Families will start receiving monthly advance payments July 15

Many taxpayers would be able to receive half of their estimated 2021 Child Tax Credit in monthly installments for the rest of this year.

The IRS said the letters are going to families who may be eligible based on information they included in their 2019 or 2020 federal income tax return.

The letters also go to those who used the Non-Filers tool on IRS.gov in 2020 to register for an Economic Impact Payment.

A second letter will be sent to eligible families to spell out the amount of their monthly payment, which will begin July 15.

Be warned: If you like a big tax refund at once, you’ll need to take action to avoid the monthly payments. Receiving a monthly payment will cut into how much you might receive as a lump sum tax refund when you file your 2021 federal income tax return next year.

IRS sends out letters about the new Child Tax Credit

The IRS plans to roll out a special tool that would allow families to opt out of the monthly payments. Instead, they would receive the full amount of the credit when filing a 2021 return next year if they qualify.

Look for more online tools from the IRS ahead.

This complex rollout of extra money to help families will demand that the IRS get as much updated information as possible.

The plan calls for enabling individuals and families to visit irs.gov and use the “Child Tax Credit Update Portal” to notify the IRS of changes in income, filing status or number of qualifying children. Families would be able to update their direct deposit information and make other changes to ensure they received the right amount as quickly as possible.

These portals are not yet available. See the special Advance Child Tax Credit 2021 page at IRS.gov/childtaxcredit2021 for updates. No specific date was given for that rollout.

Most families do not need to take any action to get a monthly payment.

The IRS will calculate the payment amount based on the 2020 tax return. The IRS said it could use the 2019 return if the 2020 return has not been filed or processed.

The monthly payments would arrive by direct deposit or check, the IRS said Monday.

Eligible families will receive up to $300 per month for each qualifying child age 5 or younger. The monthly payout is up to $250 per month for each qualifying child ages 6 to 17.

The advance payments would be issued by the IRS on the 15th of the month, from July through December.

The IRS urges those who haven’t filed their 2020 return – or 2019 return – to do so as soon as possible, so they can receive any advance payment.

“Filing soon will also ensure that the IRS has their most current banking information, as well as key details about qualifying children,” the IRS said.

Families experiencing homelessness and rural poor people, as well as other underserved groups, might not typically file a tax return based on their low income. The IRS encourages people who don’t normally file but have children to file to get money from the credit.

Eligible taxpayers have a main home in the USA for more than half the year. U.S. military personnel stationed outside the country on extended active duty are considered to have a main home in the USA.

Advance payments will not be reduced or offset for overdue taxes or other federal or state debts that taxpayers or their spouses owe.

Taxpayers will claim the remaining child tax credit based on their 2021 information when they file their 2021 income tax return.

Not all taxpayers qualify for the Child Tax Credit. How much they get will depend on their income, if they qualify.

The phaseout range for the Child Tax Credit for 2020 starts at modified adjusted gross income of $400,000 for married filing jointly and $200,000 for other filers.

This is the phaseout range for the Child Tax Credit for 2021 for the basic $2,000 credit.

For 2021, there could be extra money on top of the $2,000 for many families who have more modest incomes.

If they qualify, they’d get up to an additional $1,000 for children ages 6 through 17 and an additional $1,600 for children up through age 5.

You’d qualify for the entire amount of the larger credit if you are single and your income is less than $75,000. If you are single and file taxes as a head of household, your income must be less than $112,500 to qualify for the full benefit.

If married and filing a joint return, you’d qualify for the full benefit if your combined income is less than $150,000.

The IRS notes that 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.

An important change: The entire credit is fully refundable for 2021. That means that eligible families can get the extra money, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.

ContactSusan Tompor: stompor@freepress.com. Follow her on Twitter@tompor.

News Related

OTHER NEWS

Seccom Global, Dicker Data score Check Point partner awards

Cybersecurity vendor Check Point Software has honoured a pair of Australian channel partners as some of the best in Asia Pacific for the year. Sydney managed security services provider Seccom ... Read more »

Vocus finalises $3.5 billion sale to MIRA-Aware Super consortium

Vocus has revealed it has officially been acquired by Macquarie Infrastructure and Real Assets (MIRA) and Aware Super as the transaction finalises today. The two companies, who formed a consortium ... Read more »

7-Eleven, Walmart's muffin brands recalled due to listeria contamination

Photo by: Kaihao Zhao/Unsplash 7-Eleven and Walmart have a lot of items and brands in their stores, and it was revealed that some of the muffin brands that they sell ... Read more »

Behind Arq Group's move into Canberra

Canberra has been a strong hub for the IT sector largely due to the amount of IT and consulting work available, and the Australian IT channel has established a strong ... Read more »

Didi and Luckin's New York debacles shed light on corporate liability insurance as shield against class action lawsuits

Didi Global’s New York listing debacle is shedding light on a little-known area of insurance that protects corporate directors and officers (D&O) from legal liability, as a number of law ... Read more »

Tech scare sends Hong Kong stocks reeling in week as Chinese tutoring firms crash

Hong Kong stocks capped a weekly loss on lingering concerns about Beijing’s crackdown against internet-platform companies and as a surge in Delta variant cases clouds global economic recovery outlook. Chinese ... Read more »

Samsung Display to supply Apple with OLED as it ditches LCD technology

Photo by: Samsung Display/Facebook Samsung Display will be benefiting big time as Apple ditches the LCD technology and shifts to organic light-emitting diode (OLED) display panels for its new iPad ... Read more »

Volkswagen Korea drops prices for the new Tiguan SUV model

Photo by: Volkswagen Website Volkswagen Korea is lowering the prices of its newest SUV model, which is the Tiguan. The German automaker stated that it made the decision to drop ... Read more »

HBO shuts down Apple TV, forcing subscribers to upgrade to HBO Max

Photo by: Apple TV/Facebook HBO just shut down Apple TV on Thursday, July 22, and officially ended their integration that only started in May. Now subscribers will no longer be ... Read more »

Activision Blizzard sued by the state of California over discrimination, sexual harassment

Photo by: Activision Blizzard/Facebook Activision Blizzard that is known for its popular video game titles, including “Call of Duty” and “World of Warcraft,” has been sued by California's Department of ... Read more »

Consumer spending boom continues with 9% rise in May

Photo: Depositphotos.com Consumer spending soared by nearly 9% in May, but was still slightly down on April’s 9.7% rise, which itself was the biggest since World War II. However, the ... Read more »

Bankers expect bigger bonuses in 2022 as financial sector goes on Asia hiring spree

Financial services professionals in Asia are confident they will receive bigger bonuses in 2022 as banks and other institutions scramble to attract and retain talent in Asia, according to headhunting ... Read more »

DUG Drinks: World's first potato milk launched by Swedish vegan dairy brand

Photo by: DUG Drinks/Instagram DUG Drinks, a Swedish startup that produces vegan dairy products, just developed the very first potato-based milk in the world. The company has already launched the ... Read more »

Evergrande resolves debt dispute with Guangfa Bank after Hong Kong lenders withdrew mortgage loans to its apartment buyers

Heavily indebted developer China Evergrande said on Thursday that it resolved a dispute with a bank creditor that led to 132 million yuan (US$20 million) in its assets being frozen ... Read more »

At two years old, Shanghai's Star board is already bigger than Spain's capital market and shields investors from global tech rout

The Star Market, China’s Nasdaq-style board, which is celebrating its second anniversary, has emerged as a safe haven for investors seeking shelter from Beijing’s crackdown on technology companies. The board, ... Read more »

Hong Kong stocks snap three-day slump as oil firms rebound while Evergrande halts free-fall

Hong Kong stocks rose at the lunch break as Chinese oil giants advanced while shares of debt-stricken developer Evergrande surged in a relief rally. The Hang Seng Index rose 1.8 ... Read more »

China's yuan to become more influential part of the global financial system, survey shows

The Chinese yuan is on course to become a much more influential part of the global financial system with almost a third of central banks planning to add the currency ... Read more »

Indexes inch higher on Wall Street, preserving weekly gains

Major indexes edged higher on Wall Street after a day of muted trading, preserving their gains for the week. The S&P 500 emerged from a midday slump to end with ... Read more »

Intel raises full-year revenue forecast

Intel raised its annual revenue forecast on Thursday, focusing on its dual strategy of increasing in-house production as well as outsourcing to catch up with rivals. Intel, one of the ... Read more »

Macquarie Cloud Services achieves Azure Expert MSP status

Macquarie Cloud Services, part of Macquarie Telecom Group, has achieved Azure-only Expert MSP credentials. The company said it is the quickest and Australian partners has gone from inception to certification ... Read more »

Sophos buys UK network detection and response MSSP Braintrace

Sophos has purchased MSSP US-based startup Braintrace to get visibility into suspicious network traffic patterns, including encrypted traffic, without the need for man-in-the-middle decryption. The UK-based platform security vendor said ... Read more »

Collaboration software vendor Mural lands in ANZ, taps Robert Malkin as APAC boss

Digital workspace and visual collaboration software vendor Mural has hired Robert Malkin to lead its Asia-Pacific business. This marks the company’s launch into APAC, starting with Australia and New Zealand. ... Read more »

MNF Group closes $31m direct biz sale to Vonex

MNF Group has finalised its deal with Vonex for the sale of part of the company’s direct business for $31 million. The two signed the conditional term sheet on 7 ... Read more »

Wools of NZ, Primary Wool merger to go to farmer vote in November

About 2100 farmers will vote in November on a proposed merger between grower-owned export and marketing company Wools of New Zealand (WNZ) and Primary Wool Co-operative to form a fully ... Read more »

Covid 19 coronavirus transtasman bubble pause: Board of Airline Representatives pushes for wage help

An airline group says aviation businesses affected by the suspension of quarantine-free transtasman travel should be able to claim wage support. The Board of Airline representatives says the eight-week pause ... Read more »

Ingram's CloudBlue updates go-to-market program

Ingram Micro subsidiary CloudBlue has updated its ‘Go-To-Market (GTM) Fast-Track’ program, aiming to decrease time to market by 50 percent. Updates include virtual showrooms and greater insights, including access to ... Read more »

PUBLISH to make NFTs of national treasure of Korea, Hangul manuscript ‘Hunminjeongeum Haerye'

National Treasure No. 70, “Hunminjeongeum Haerye”. Credit: PUBLISH PUBLISH announced it has been contracted by Kansong Art Museum to implement the technical solution for the conversion of the Haerye Edition ... Read more »

Intel sales forecast implies rocky second half of 2021

Intel Corp said it still faces supply chain constraints and gave an annual sales forecast that implied a weak end of the year. The 2021 forecast of US$73.5 billion in ... Read more »

Mercedes plans to go all-electric by decade's end

Daimler AG’s luxury car brand Mercedes-Benz says it is stepping up its transition to electric cars, doubling the share of sales planned by 2025 and sketching out a market scenario ... Read more »

Sydney shrugs aside Covid-19, cooling measures and tensions with China to emerge as hottest luxury homes market globally

The absence of foreign homebuyers, including those from mainland China, in Australia’s property market has not prevented Sydney from copping the crown of being the world’s top prime property market, ... Read more »

Websites back up after brief global outage linked to Akamai

Many websites were briefly down in an outage sparked by a glitch in Akamai Technologies Inc’s systems, the second major disruption linked to the cloud company in about a month. ... Read more »

As floods hit Henan province, investors get respite with stocks spared from major sell-off

As Henan counts the huge economic damage from unprecedented flooding, stock investors are finding the market reactions far from disastrous as companies with operations in the central Chinese province ploughed ... Read more »

Debt-ridden electric vehicle maker Faraday Future loses Zhuhai government as a crucial investor ahead of US listing

Electric vehicle (EV) company Faraday Future failed to secure a crucial government investor ahead of its public listing in the United States, potentially crimping the debt-ridden carmaker’s expansion plans. The ... Read more »

Sin City Calling: How to book cheap flights to Las Vegas?

With the Coronavirus cases receding gradually and expensive fares no longer a roadblock for your next vacation, it's time to leave that couch behind and head out for a place ... Read more »

S. Korea's DHIC to invest additional $60 million in US-based NuScale Power

The investment in NuScale Power will enable Doosan Heavy to win more contracts to supply parts for SMRs. Doosan Heavy Industries & Construction Co. (DHIC) will invest US$60 million to ... Read more »

Korea Aerospace receives $240 million trainer jet order from Indonesia

 In 2012, KAI supplied 16 T-50 trainer jets worth $400 million. Korea Aerospace Industries Co. (KAI) has received a $240 million deal to supply six T-50 advanced trainer jets to ... Read more »

Luxury brands LV, Gucci, Balenciaga and Kenzo scramble to attract young S. Korean men

Luxury brands Louis Vuitton, Gucci, Balenciaga, and Kenzo are scrambling to attract South Korean men in their 20s and 30s, who are becoming major consumers. Louis Vuitton is opening another ... Read more »

Hong Kong’s MTR Corp should bear responsibility for shoddy construction at residential project, lawmakers argue

The MTR Corporation should be held responsible for a construction defect at a residential project atop a railway station in Hong Kong forcing the demolition of two blocks of flats, ... Read more »

HSBC, ICBC (Asia) among Hong Kong banks to stop offering mortgage loans for unfinished flats built by debt-stricken China Evergrande

HSBC, Industrial and Commercial Bank of China (Asia) and other major banks in the city have stopped offering mortgage loans for unfinished flats built by heavily indebted property developer China Evergrande ... Read more »

Melbourne's Intelli-Systems tapped to launch Schneider Electric's micro data centre-as-a-service in Australia

Melbourne-based UPS reseller and critical infrastructure solutions provider Intelli-Systems has launched Schneider Electric’s micro data centre-as-a-service in Australia. Developed specifically for the NSW Aboriginal Land Council, the offering provides micro ... Read more »