Yo what's going on everybody?
My name is Ryan, I'm a CPA and today I'm going to be talking about the Child Tax Credit and
some updates here.
But first, I would love it if you would please smash that like button to this video and if
you would consider subscribing to my channel, that would be awesome.
And leave me a comment below about any questions, concerns, whatever you have about this topic
alright.
So onto the Child Tax Credit.
What is new here?
What is going on?
So just to give you a quick recap, the Child Tax Credit is a credit that you get, a $2,000
credit usually for each qualifying child that you claim on your taxes.
Now for the 2021 year, that has been updated to a maximum of $3,000 for any qualifying
child between the ages of 6 and 17.
And then $3,600 for any qualifying child under the age of 6.
What's more weird this year also is that the IRS plans on giving you advance payments for
the Child Tax Credit.
It's kind of like the stimulus payments.
They're going to give you monthly payments starting July 15th through December 15th of
the 2021 year.
And then the rest of your tax credit you're going to claim on your tax return when you
file it in 2022.
So the amount of the monthly payments will be $300 for each child that you have under
6 years old and $250 per month for each child between the ages of 6 and 17.
Of course, there are income limits so if you are a married couple that has children, you
will get the full credit if you make under $150,000 total.
If you are filing as Head of Household, then you need to make under $112,000 in order to
get the full credit.
And the credit will begin to faze out after these income limits.
So the IRS sent a letter out to taxpayers informing them that, about the credits, you
know, about the monthly payments, if they are eligible, that kind of thing.
It was a very basic letter as you can see here.
They also sent out information on an IRS tool, or website that you can go to for various
things, you know, whether you want to un-enroll from the credit, from the advance payments
or if you're not required to file a 2020 tax return.
So that's the non-filer tool.
You know, if you went through the 2020 year and you were not required to file a tax return,
then you should use the non-filer tool on the IRS's website, which I'll put in the description
below, in order to claim your Child Tax Credit.
Because that is not something you want to miss out on just because you didn't file a
tax return okay.
And when you go to the website, you go onto the tool, you will see that there are some,
some guidelines on whether or not you should use that tool.
It's usually for people that are not required to file the 2020 year tax return and who lived
at least half a year in the U.S..
The next big thing about the tool that the IRS released is giving you the ability to
opt-out of your monthly advances.
Some people might have their reasons of why they want to do this but this will give you
an option to do that.
If you don't do anything, you will automatically get the monthly advances if you qualify.
So, if you choose to opt out, then you can do that using the IRS tool.
That doesn't mean you're throwing away money, that just means you're not getting the payments
in advance.
So if you opt out, you're going to receive your full credit when you file your taxes
in 2022.
So when you receive these monthly advances, it's going to start July 15th, pay you through
December 15th of this year, that means that you're going to receive half of your credit,
okay.
$300 a month if you are, for each child under 6 years old and $250 a month for each child
between 6 and 17.
That means you're going to receive half your Child Tax Credit that you are eligible for.
When you file your taxes, when you file your 2021 taxes next year, you will claim the other
half as a normal tax credit, you know that offsets your tax liability.
This all gets reconciled when you file your 2021 taxes so if you don't receive it for
some reason this year, then don't worry it's not lost, you will get it when you file your
taxes.
Now the next big question probably is will you have to pay it back if you receive too
much in advance?
Some people thought, including myself, like the stimulus payments, you wouldn't have to
pay it back but the IRS's answer to that is actually a "maybe".
You might have to pay it back.
So how the IRS determines this, is they will put each taxpayer on a repayment protection
program.
So, if for some reason you got more of an advance then you actually should have qualified
for, you would be put under this uh, kind of like a few step process to see if you qualify
for the repayment protection program.
I'm not going to go through the details of this on this video, I will show you how to
get to the details of it here in a little bit.
But basically, if you qualify for the repayment protection program, then you will get to exclude
a certain amount of repayment back to the IRS.
And you know, that could be like the full amount, it depends on your income, it depends
on how many dependents you're claiming, you know, a few things like that.
If you don't qualify for the repayment protection program then you will have to pay back the
Child Tax Credit.
So what is all in this IRS tool that I'm talking about?
Uh, just to summarize, there is a you know, a way for you to un-enroll from the advance
payments, there is the non-filer tool if you were not required to file your taxes in 2020,
there's an FAQ, just for you to get more information, and that's where you're going to find the
details of the repayment protection program, alright.
There's also some publications, you know some guidance like that kind of thing, technical
guidance for you or for tax preparers, that kind of thing.
And there are, there is a tool for you to determine whether or not you're eligible for
the Child Tax Credit, for the advance monthly payment, that sort of thing.
Just a quick video here.
I wanted to give you an update on the Child Tax Credit as you know, that's going to be
rolling out here really soon, in maybe 2 weeks or so.
And if you have any questions, feel free to leave those in the comments below and I'll
do my best to answer them.
And again, if you found this video useful, please do consider subscribing to my channel
and smashing the like button, that would be awesome.
All right, so that's all I've got for today.
Thanks for joining me.
I hope you stay safe.
Take care of yourself.
Have a good rest of your week.
Have a good weekend and I will see you next time.