THE 2021 CHILD TAX CREDIT

For tax year 2021, families claiming the Child Tax Credit will receive up to $3,000 for each qualifying child who is between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under the age 6 at the end of 2021.     

The increase – the additional $1,000 or $1,600 - is reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return, $112,500 for heads of household, and $75,000 for all other taxpayers.  The remaining $2,000 is phased out based on the pre-2021 rules.  For 2021 the credit is fully refundable. 

Advance payments of up to 50% of the 2021 Child Tax Credit will begin to be made regularly from July through December to eligible taxpayers who have a main home in the United States for more than half the year.  You can elect not to receive these advance payments.   

Like the advance premium tax credit, any advance payment of the Child Tax Credit will be reconciled on the 2021 Form 1040.  Please be aware that if you do receive advance Child Tax Credit payments in 2021 this will reduce the potential federal refund on your 2020 Form 1040.

The IRS website has established the following tools to assist families in dealing with the changes to the credit. 

Child Tax Credit Eligibility Assistant: allows families to answer a series of questions to quickly determine whether they qualify for the advance credit

Child Tax Credit Update Portal: allows families to verify their eligibility for the payments and, if they choose to, unenroll or opt out from receiving the monthly payments

Child Tax Credit Non-filer Sign-up Tool: allows eligible individuals who don’t normally file an income tax return to register for payments

It is my understanding that the IRS will provide those who receive advance payments with a statement in January.  Be sure to save this statement and give it to your tax preparer.       

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

 A day late, but hopefully not a dollar short.

* “I Haven’t Received My IRS Refund. Can You HelpMe?”  I have received several emails with this message.  So has Russ Fox of TAXABLE TALK and many other fellow tax pros.

 

Russ joins me in pointing out (the highlights are mine) –

 

“Neither I nor any other tax professional can speed up your IRS refund.”

 

And –

 

“Your tax professional cannot fix this.  There is no one to call to have this resolved.  Indeed, the IRS asks that you do not call them as there really is nothing that can be done.  Please don’t call your tax professional either; he or she cannot make your refund come to you any faster this year.  You must just be patient.”

 

* Speaking of Russ, he provides a review of “The 2021 Tax Season (Part 1)”.  Part 1 refers to the period ending May 15^th – Part 2 ends October 15^th.

 

* BTW - have you seen my annual review of THAT WAS THE TAX SEASON THAT WAS yet? 

 

Why not?

 

* A blast from the not-so-distant past that is still valid from Paul Murray at THE GOOD MONEY LIFE (new to me) - “4 Reasons We Picked 529 College Savings Plans for Our Children”.

 

* Kay Bell explains “Taxpayers now can go online to optout of Advance Child Tax Credit payments, verify eligibility” at DON’T MESS WITH TAXES.

 

THE LAST WORD –

 

Take the NO GOP PLEDGE.  The future of American democracy depends on it.

 

TTFN

READ MY LIPS . . . . .

 

There is absolutely NOTHING I, or any tax professional, can do to expedite the processing of your 2020 federal or state income tax return or to find out why your anticipated federal or state refund has not been issued yet.
 
There is NOTHING I, or any tax professional, can do to find out the status of your 2020 federal or state tax return that you cannot do yourself – by going to http://www.irs.gov/refunds or the corresponding tool on your state tax agency’s website.
 
The IRS is backed up due to its offices being closed for too many months in 2020.  You need to be patient.
 
DO NOT call or email me, or your tax professional, to ask about your 2020 refund. 
 
Got it?
 
TTFN

DOCUMENTING YOUR INCOME AND DEDUCTIONS

 

I expect by now you have prepared and submitted your 2020 federal and state tax returns and are waiting, patiently, for your refunds. 

Did you find it difficult to compile all the necessary 2020 information and documentation to give to your tax preparer?  The more organized you are at tax time the more likely you will be able to take full advantage of all deductions, credits and tax-saving strategies available. And the more organized you are the lower your tax preparation fee.

I have created the 2021 GUIDE TO TAX RETURN RECORDKEEPING to help you in gathering and organizing your 2021 tax “stuff” and help you to pay the absolute least federal income tax possible for 2021.

My guide contains detailed text covering what is taxable and deductible and what information and documentation you will need to properly prepare your 2021 tax return, and forms, schedules and worksheets for compiling and identifying the documentation you will need to provide to your professional tax preparer in 2022.  It discusses in detail –

·         MY BEST TAX ADVICE

·         WHAT TO GIVE YOUR PREPARER

·         WHO MUST FILE A 2021 TAX RETURN

·         FILING STATUS

·         DEPENDENTS AND EXEMPTIONS

·         INFORMATION RETURNS

·         INVESTMENT SALES

·         2021 CONTRIBUTION LIMITS FOR RETIREMENT PLANS

·         REPORTING GAMBLING INCOME

·         ADJUSTMENTS TO INCOME

·         ITEMIZED DEDUCTIONS 

·         DEDUCTIBLE RENTAL EXPENSES

·         CHILD CARE EXPENSES

·         ESTIMATED TAXES

·         HOW LONG MUST I KEEP MY TAX RECORDS

·         YEAR-END TAX PLANNING

The cost of the Guide is only $10.95 sent as an email attachment – the text in pdf format and the forms, schedules and worksheets in Word format.  A print version sent via postal mail is also available for $15.45.

Send your check or money order for $10.95 or $15.45, payable to Taxes and Accounting, Inc, to -

TAXES AND ACCOUNTING, INC

2021 GUIDE TO TAX RETURN RECORDKEEPING    

POST OFFICE BOX A

HAWLEY PA 18428

TTFN