Text Resize
Subsribe to RSS Feed

Tuesday September 21, 2021

Washington News

Washington Hotline

IRS Publishes FAQ on Advance Child Tax Credits

As the payment date nears for the Advance Child Tax Credit (ACTC) distributions, the IRS has published frequently asked questions (FAQs) on IRS.gov. The FAQs are designed to help parents understand who qualifies for the credit and how to obtain their payments.

1. How Much are Advance Child Tax Credit Payments?

The advanced payments will be a total of six payments equal to 50% of the estimated Child Tax Credit for the taxpayer's 2021 tax return. This payment would normally be received when you file your return in 2022. However, up to 50% of your credit amount may be distributed through advance monthly payments. For a moderate-income family of five with children ages 4, 7 and 10, the total credit will be $9,600. The ACTC amounts will total $4,800 and the 2021 tax credit will be the remaining $4,800.

2. Do You Need to Take Action?

Most individuals will not need to take any action and will receive Advance Child Tax Credit payments based upon the information in their 2020 or 2019 tax return. Some individuals who used the Non-Filer tool on IRS.gov to receive Economic Impact Payments will also receive an automatic distribution. Individuals who have not filed a tax return or used the Non-Filer tool should file a simplified tax return for 2020 in order to receive payments. The simplified return is available on IRS Free File on the IRS website. With all filing methods, you should include your direct deposit account information to receive timely payments.

3. What if You Do Not Have Income?

The Advance Child Tax Credit distributions will be made even if you have $0 of income. You can file a 2020 return with IRS Free File to receive your appropriate payments.

4. Can You Wait and File Your Tax Return to Collect?

There may be individuals who would prefer to wait and collect the Child Tax Credit payment when they file their 2021 tax return. This will be an option that you can elect through IRS.gov when the Child Tax Credit Update Portal is available, which is projected to be launched in late June.

5. When Will an ACTC Payment be Made?

The first ACTC payments will be distributed on July 15, 2021. The remaining five payments will be distributed on the middle of each of the next five months.

6. Who Qualifies for Child Tax Credit Payments?

The American Rescue Plan created a credit of $3,600 for qualified children under age 6 and $3,000 for those between age 6 and 17. One-half of the credit will be distributed through the advanced payments. The credit is phased out for individual taxpayers with modified adjusted gross income over $75,000 or married couples filing a joint return with incomes over $150,000. Generally, parents with a qualifying child will receive the payments. You must live in one of the 50 states or the District of Columbia for more than half of the year. You do not need to live in the same physical location or have a permanent address.

7. Will the IRS Help With My 2021 Tax Return?

If you receive ACTC payments, the IRS will send Letter 6419 in January 2022. This letter will show the total amount of ACTC payments that were sent during 2021. You may use Letter 6419 to complete your 2021 tax return and can claim the balance of your Child Tax Credit.

Editor's Note: The Advance Child Tax Credit is a substantial benefit, particularly for families with moderate incomes. IRS Commissioner Chuck Rettig stated, "We have been working hard to begin delivering the monthly Advance Child Tax Credit to millions of families with children in July. This new tool will help more people easily gain access to this important credit as well as help people who don't normally file a tax return obtain an Economic Impact Payment. We encourage people to review the details about this important new effort."

Published June 18, 2021
Subsribe to RSS Feed

Previous Articles

IRS Will Send Child Tax Credit Letters to 36 Million Families

Advance Child Tax Credit Payments to Begin in July

167 Million Stimulus Payments

Advance Child Credit Payments Start in July

Increased Child Care Tax Benefits in 2021

  • Bequests
    Joe and Anna have been faithful supporters of our organization. They believe it is important to help further our mission.
  • Using a Beneficiary Designation to Make a Gift to Charity
    Using a Beneficiary Designation to Make a Gift to Charity
    Joanne and her late husband Hal had been longtime supporters of our organization. Recently, Joanne's children encouraged...
  • Fixed Income for Retirement
    Fixed Income for Retirement
    After working for decades as a pediatrician in a small town, Patricia is ready to retire.
  • Tax-Free Sale
    Tax-Free Sale
    Howard and Lynn were both age 55 when they purchased some vacant land a few miles outside of town. They thought real estate would be a good investment that could be sold later for a profit.
  • Capital Gains Tax Bypassed
    Capital Gains Tax Bypassed
    Peter and Gail were nearing retirement. Over the years, with the help of their financial advisor, they made solid investments in securities and built a sizable portfolio.
  • Peace of Mind Gift Annuity
    Peace of Mind Gift Annuity
    Many years ago, Clara bought a home. Since she was very pleased with her home, she bought stock in the company that built the home.
  • Endowment Gift
    Endowment Gift
    Pat and Shelly were recently married. They both had been dedicated volunteers at their favorite charity for many years.
  • Sale and Unitrust
    Sale and Unitrust
    Gene and Carol purchased stock in a small medical service company several years ago. The company has done well.
  • The Retirement Unitrust
    The Retirement Unitrust
    Mary grew up on a farm. When her parents passed away, she and her husband Bill inherited the farm.
  • Property Turns Into Income
    Property Turns Into Income
    Miranda lived in the family home where she and her spouse had raised their three children. After her spouse passed away, Miranda found it increasingly difficult to care for her property.
  • Flexible Deferred Gift Annuity
    Flexible Deferred Gift Annuity
    Luis is a 54-year-old executive at a large healthcare company. He purchased company stock during years when the stock price was low, and now the stock has grown substantially in value.
  • Part Gift and Part Sale
    Part Gift and Part Sale
    Susan and Kevin bought a vacant lot along Lake Michigan many years ago. They had planned to build a second home so that their family could spend their summers along the lake.
  • Current Gifts
    Current Gifts
    As is the case with many families, there are times each year when Jim and Sharon focus their attention on gift giving.
  • Gift of a Bank Account When No Longer Needed (POD)
    Gift of a Bank Account When No Longer Needed (POD)
    Keith has been a faithful supporter of The Marfan Foundation and makes regular gifts to support our work.
  • Transferable on Death (TOD) Gifts
    Transferable on Death (TOD) Gifts
    Harold and Jeanne married after meeting at an event The Marfan Foundation held for our donors. They wanted to leave a legacy gift...
  • A Bequest to Further Good Work
    A Bequest to Further Good Work
    Nancy and David were dedicated volunteers. Over the years, they had seen many individuals helped by the good work of their favorite charity.
  • Deferred Gift Annuity
    Deferred Gift Annuity
    Several years ago, Larry and Allison invested $30,000 in what they believed to be an attractive stock.
  • What Will You Do with Your Unspent Retirement Savings?
    What Will You Do with Your Unspent Retirement Savings?
    Michael and Kelly were retired engineers with two adult children. They owned a home, some stocks, and IRAs.
  • Gift Annuity for Real Estate
    Gift Annuity for Real Estate
    Jonathan purchased his home many years ago for $80,000. The home is now worth $420,000. Jonathan wants to sell his home and buy a condo for $130,000.
  • A Bequest to Save Taxes
    A Bequest to Save Taxes
    Thomas was a widower who had a great love for our organization. As an individual who had directly benefited from our work, Thomas wanted to thank us with a gift from his estate.
  • Leading for the Future
    Leading for the Future
    Luke and Cynthia spent many years volunteering and supporting their favorite charity. They wanted to give back in a way that would help fulfill its mission.
  • Give it Twice Trust
    Give it Twice Trust
    While visiting her favorite charity's website, June came across the idea of a give it twice trust. She contacted the charity for more information.
  • Providing for Our Children's Future
    Providing for Our Children's Future
    Ron and Kathy worked for many years building their nest egg for retirement.
  • Bequest of Insurance
    Bequest of Insurance
    Marla and Wayne purchased a life insurance policy many years ago to create security for their children's future.
  • Testamentary Charitable Remainder Unitrust: Have Your Cake and Eat it Too!
    Testamentary Charitable Remainder Unitrust: Have Your Cake and Eat it Too!
    We have all heard the saying "You can't have your cake and eat it too." This phrase describes a situation where we want two good things at the same time when that isn't possible.
  • A Personal Donor Story
    A Personal Donor Story
    "I want the work of the foundation to go forward whether I'm here or not"
    Estate planning is your final statement about the causes you care about