How to take advantage of the 2021 Advance Child Tax Credit

Date
June 20, 2021 Posted By
ASAD AHMAD
Categories

On this Father’s Day, what’s better than talking about the Advance Child Tax Credit Payments? Yes, the IRS will finally start issuing 50% of your 2020 Child Tax Credit payments starting July 15th, 2021, through December 31, 2021. While both moms and dads have worked hard throughout this pandemic, this credit will provide much needed relief for working families. There is a lot of confusion and misconceptions around this credit, first of all you don’t have to show income on your tax return to qualify. In fact, I have seen some of my clients show losses and qualify for those tax credit. You don’t even need to have filed your 2020 return to qualify, the IRS has something called the Non-Filer Tool. The non-filer tool allows you to qualify for the following:

1.   Third Economic Recovery Stimulus Payment

2.   2020 Recovery Rebate

3.   Child Tax Credit

Still, some of you may be wondering what does it take to qualify for this tax credit? Simple, here are the main requirements to qualify for this credit:

  • You must have a child (son, daughter) who doesn’t turn 18 before January 1st, 2022.
  • Your child must not provide support for more than one-half of their living expenses.
  • Your child lives with you, and you provide support for more than one-half of their living expenses.

If you claimed this tax credit on your 2020 tax return, then you do not need to take any further action. Your advance tax credit payments will start on July 15. However, there are some nuances, generally the advance tax credit payments are not taxable. By the same taken, if for instance you fail the eligibility requirement (one of your kids turns 18 before 2022) then you must return any excess tax credit payments to the IRS. The IRS will send you Form 6417 before any payments are initiated.

Get in touch with me if you aren’t sure if you did not file your 2020 taxes or aren’t sure how the Advance Child Tax credit applies to your unique situation. Above all, dads are awesome, and I just want to give a huge shot-out to the FATHERS who are busy chopping wood and carrying water. Happy Father’s Day!