Advance Child Tax Credit Payments Coming to an End
PRESQUE ISLE, Maine (WAGM) -
Advance Child Tax Credit Payments have been depositing into qualifying families bank accounts since July, but that’s about to come to an end. NewsSource8′s Brian Bouchard looks at what that means to your wallet as tax season approaches.
Advance Payments of the Child Tax Credit started rolling out to families in July of 2021 as part of the American Rescue Plan. The plan called for an overall raise of the credit, per child, from $2,000 per child to up to $3,600 per child. However, the Advance Payments were only for 2021, meaning no Advance Payments are set to be issued this year.
“The Advance payments are actually going to affect their 2021 tax filing, because they do need to be reported on their ‘21 tax return and it may reduce their tax credit for 2021″
Tim Poitras is a Certified Public Accountant and Partner at Chester M. Kearney, and he says, for the most part families should be okay when it comes to filing their taxes this spring, however there are a few key things to be aware of:
“The first thing to remember is that it will need to be reported on your 2021 tax return and if that’s not reported correctly it could delay any refund.”
The IRS will be sending a form called Letter 6419 to families this month, showing the total amount of advance payments received, you will need to reference this amount when filing your taxes. And if you normally end up having to pay in, you adjusted your exemptions, or if you normally don’t receive a significant refund, he had these words of warning:
“Something they may want to consider now, while they still have 3 or 4 months to prepare: if they got the advance credit, but they didn’t prepare and they were always close they could end up owing something so they may want to look at that now and be prepared for April 15th, you could end up owing a significant amount. Moving into 2022 we’re going back to the old laws, the credit is reverting back to $2000 dollars per child and the advance payment has stopped.”
And that can be a very abrupt and significant change for many families who have grown to rely on the payment to get ahead. According to a recent Census Bureau Household Pulse Survey, 68% of the families receiving the payment have used it to supplement household spending or to pay off debt. A continuation of the Advance payments was proposed in President Biden’s Build Back Better Agenda. WAGM reached out to Senator Susan Collins to get her take on the Advance Child Tax Credit Payments, and we received this statement.
“I am open to considering proposals that would support working families and reduce childhood poverty and look forward to working with colleagues of both parties on bipartisan solutions.” – Senator Susan Collins
But Poitras wants to ensure that everyone understands one very important takeaway from all this:
Tim Poitras – CPA/Partner, Chester M. Kearney
“The important thing is get that letter or the transcript and make sure you reconcile that well, because if you don’t you’re going to have significant delays in getting your 2021 tax return processed with the IRS.”
Brian Bouchard, NewsSource8
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