NJCPA Reminds Taxpayers to Take Advantage of New Advance Monthly Payments of the Child Tax Credit

NJCPA Reminds Taxpayers to Take Advantage of New Advance Monthly Payments of the Child Tax Credit

June 25, 2021

Payments to Begin July 15

The New Jersey Society of Certified Public Accountants (NJCPA) reminds taxpayers who may qualify for the Advance Child Tax Credit to be aware of important changes that will help them receive advance payments of the credit. The IRS will pay half of the credit amount due taxpayers in monthly payments on July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15, while taxpayers will claim the other half after filing their 2021 income tax returns. The expanded and advanced payment initiative was authorized under the American Rescue Plan in March 2021.

The IRS sent letters to more than 36 million taxpayers who may be eligible for the tax credit according to their 2020 or 2019 federal income tax return. Those who are eligible will receive a more specific, second letter from the IRS that estimates how much they will receive in their payments, which will be distributed by either check or direct deposit.

According to the IRS, the payments will be up to $300 per month for each child under age 6 and up to $250 per month for each child between the ages of 6 and 17. The American Rescue Plan increased the overall amount to be distributed to families from $2,000 per eligible child excluding 17-year-old children prior to 2021 to $3,600 for qualifying children under the age of 6 and $3,000 per child for qualifying children between the ages of 6 and 17 currently.

The maximum Child Tax credit is available to taxpayers with a modified adjusted gross income (AGI) of the following:

• $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.

The entire credit is fully refundable for 2021, which means even if taxpayers do not owe federal income tax, they are still eligible for the credit. The IRS has a way for families to determine if they qualify for the advance credit via the new Child Tax Credit Eligibility Assistant tool and a way for families to verify eligibility for the payments or unenroll, or opt out of, receiving the monthly payments in order to receive a lump sum via a new Child Tax Credit Update Portal.

The IRS and the Treasury also offer a way for low-income families to register for the Advance Child Tax Credit even if they do not normally file income tax returns through a Non-filer Sign-tool.

“Every bit of savings helps families who are recovering from the pandemic-induced strain on their finances. It’s important for them to take advantage of what is available to them. The IRS has many resources on their website to assist taxpayers. Taxpayers should also know that CPAs are here to help and explain what they may qualify for,” said Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director at the NJCPA.