September 20, 2021

Yes, you can get paid because of your kids

Eligible families will have the option of receiving monthly payments for having children.

As part of the federal government’s coronavirus relief bill, 39 million families could receive $300 in monthly payments from the Internal Revenue Service, per child younger than 6, and $250 per child 6 or older for those who qualify. Payments begin July 15.

But common with other tax laws, some research is needed to determine if the payment is ideal for families.

“I strongly encourage people interested in this to meet with their tax preparer and review,” said Elizabeth Green, from Green Accounting and Tax in Creston. “Not every family has the same income and tax situations.”

According to the IRS, the IRS will pay half the total credit amount in advance monthly payments beginning July 15. Participating families will claim the other half when filing 2021 income tax returns. These changes apply to tax year 2021 only.

To qualify for advance child tax credit payments, parents, and their spouse, if filed a joint return — must have: filed a 2019 or 2020 tax return and claimed the child tax credit on the return; or provided information in 2020 to receive the economic impact payment using the non-filers. The person must have a qualifying child who is younger than 18 at the end of 2021 and has a valid Social Security number; and made less than certain income limits.

The IRS will use information provided to determine if families qualify and automatically enroll for advance payments.

Advance child tax credit payments are early payments from the IRS of 50 % of the estimated amount of the child tax credit that may be properly claimed on the 2021 tax return during the 2022 tax filing season. If the IRS has processed the person’s 2020 tax return or 2019 tax return, these monthly payments will be made starting in July and through December, based on the information contained in that return.

Advance child tax credit payment amounts are not based on the credit for other dependents, which is not refundable.

If eligible to receive advance child tax credit payments based on 2020 tax returns or 2019 tax returns (including information entered into the non-filer tool for economic impact payments on IRS.gov in 2020), those people will generally receive those payments automatically without needing to take any additional action.

For those who have not filed their 2020 tax return or 2019 tax return, the IRS has an online non-filer tool that will allow individuals who weren’t required to file (and have not filed) a tax return for 2020 to file a simplified tax return. This simplified tax return will allow eligible individuals to register for advance child tax credit payments and the third economic impact payment, as well as claim the 2020 Recovery Rebate Credit.

Those eligible can unenroll from receiving advance child tax credit payments for several reasons, including if the expected amount of taxes owed to be greater than the expected refund filing the 2021 tax return. The payments received are an advance of the child tax credit that would normally be received when filing the 2021 tax return. Because these credits are paid in advance, every dollar received will reduce the amount of child tax credit claimed on the 2021 tax return.

“This means that by accepting advance child tax credit payments, the amount of your refund may be reduced or the amount of tax you owe may increase,” according to the IRS.

John Van Nostrand

JOHN VAN NOSTRAND

An Iowa native, John's newspaper career has mostly been in small-town weeklies from the Rocky Mountains to the Mississippi River. He first stint in Creston was from 2002 to 2005.