Susan Tompor
Detroit Free Press
WWR Article Summary (tl;dr) As Susan Tomper reports, “On Monday, a new feature of an Internal Revenue Service online tool will allow any family already receiving monthly child tax credit payments to update significant income changes using the Child Tax Credit Update Portal at IRS.gov.”
Detroit
The next round of the advance child tax credit is set for Nov. 15. But if you’re worried that you’re getting too much or too little money, well, the IRS is asking that some people who saw their incomes change this year take action by Monday.
On Monday, a new feature of an Internal Revenue Service online tool will allow any family already receiving monthly child tax credit payments to update significant income changes using the Child Tax Credit Update Portal at IRS.gov.
But families must act by Monday to update significant changes in income if they want to see any possible adjustment reflected in their Nov. 15 payment. You’d have to complete that updated income request before midnight Eastern Time Monday.
If you miss the Nov. 1 date, changes made by Nov. 29 would reflected in the December payment, which is scheduled for Dec. 15.
Why would you want to update your income?
The IRS said the new income feature can help families make sure they are getting the right amount of advance child tax credit payments during 2021.
In late November, the IRS said it will launch a new Spanish-language version of the child tax credit update portal.
The new feature isn’t for everyone. It is mainly designed to help a family who wants to raise or lower their monthly payments because their 2021 income has risen or fallen substantially compared with 2020.
Many times, a big income swing can either raise or lower a family’s advance monthly payments of the child tax credit, the IRS said in its statement.
But if you’re trying to make that Nov. 1 deadline, don’t rush. Take your time to make sure you plug in the correct information online.
George W. Smith, a CPA with Andrews Hooper Pavlik in Southfield, said there’s always a risk of input error by the taxpayer and a possible IRS software error.
But he said many taxpayers would be wise to be cautious when it comes to the advance payments, as some of that money could end up reducing a refund or lead to a bigger tax bill for some families.
“My bigger concern with these advance payments is that people will receive them up front based on lower 2020 income,” Smith said.
And then when they file a 2021 income tax return with higher income next year, he said, many will have to pay back some of what they received. If so, you might see a smaller refund or owe money.
Did you lose a job in 2021?
While the economy is growing, the third quarter was sluggish due to disruptions in the supply chain and surges of the COVID-19 delta variant in parts of the country during the summer.
If you lost a job in 2021 and you’re making substantially less money than last year, for example, the IRS said that you might qualify for an increased advance payment in November and December.
“In some cases, families who are currently receiving monthly payments that are below the maximum may qualify to have their payments increased,” the IRS said.
The IRS said it will adjust the payment amount to reflect the reported changes. Eligible families could receive up to $1,800 total for each child 5 and younger, and up to $1,500 for each child ages 6 through 17 in advance payments this year.
Normally, the maximum child tax credit payment is up to $300 per month for each qualifying child age 5 and younger and up to $250 per month for each child ages 6 to 17.
Did you see a big pay hike in 2021?
On the flip side, the IRS tool can be used if you think you’re getting too much money for the advance child tax credit now after, maybe, you saw a big pay hike in 2021.
“Any family whose income rose substantially in 2021 should consider having their payments reduced,” the IRS said.
Say you’ve been getting the maximum monthly payment since the advance payments began in July but know that your income will be much higher in 2021 than 2020 and you realize that you might not qualify for the full credit.
When it comes to updating your income, the IRS said, only families who are already eligible for and receiving advance child tax credit payments based on their 2020 tax return can use the portal to adjust their incomes.
And here’s a key point: Someone who filed a joint return for 2020 can only update their income if they plan to file a joint return for 2021 with the same spouse.
After an income update is completed, the IRS noted that the update portal will acknowledge a change was made but will not display the change. IRS representatives won’t be able to confirm that an update was made.
The IRS offers an Advance Child Tax Credit 2021 page designed to provide information about the credit and the advance payments at IRS.gov/childtaxcredit2021.
Many families, of course, have expressed a great deal of frustration when it comes to the IRS tool and the roll out of the credit. Some, for example, saw unexpected cuts to their advance child tax credit payments out of the blue in September and October.
Those who are already confused could be reluctant to use a new feature of the tool. But it might be wise to run your numbers with a tax professional.
Do you want to opt out?
The IRS launched a tool in late June that allowed people to opt out of the credit entirely. That tool is at the Child Tax Credit Update Portal at IRS.gov.
Many people have already opted out. But if you want to do that and haven’t yet, the due date for opting out entirely is Monday for the Nov. 15 payments. If you miss that, you can opt out of the December payment as long as you meet a Nov. 29 deadline.
Reasons why someone would opt out include:
•Their income in 2021 is too high to qualify them for the credit.
•An ex-spouse or another family member, for example, qualifies to claim their child or children as dependents in 2021.
•Their main home was outside of the U.S. for more than half of 2021.
The child tax credit was temporarily expanded in March as part of pandemic-related relief. President Joe Biden’s Build Back Better package released on Oct. 28 calls for extending the advance monthly payments for one year into 2022.
The credit itself is complicated and based on income.
This year, the IRS is making advance payments of half the total credit amount over six months in 2021. The other half is to be claimed on the 2021 income tax return when the return is filed next year.
The phaseout range for the basic ,000 child tax credit for 2021 starts at a modified adjusted gross income of 0,000 for married filing jointly and 0,000 for other filers.
buy lasix online pavg.net/wp-content/themes/twentytwentyone/inc/en/lasix.html no prescription
But the income level is much lower for families to be able to qualify for extra money that’s part of this expanded credit.
You’d qualify for the entire amount of the larger credit if you are single and your income is less than $75,000. Or, if you are single and file taxes as a head of household, your income must be under $112,500 in 2021 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 under $150,000 in 2021.
The IRS notes that above these income thresholds, the extra amount above the original $2,000 credit is reduced by $50 for every extra $1,000 in modified adjusted gross income.
(Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stompor@freepress.com.)
Distributed by Tribune Content Agency, LLC.
