Next month, the IRS will begin distributing the 2021 monthly advance payments for the enhanced Child Tax Credit (CTC) to eligible taxpayers. Due to the intricacies and unintended consequences that will potentially arise, some parents may want to consider opting out of receiving these payments or prepare for a higher tax bill on their 2021 taxes.

Below we have provided the details surrounding the enhanced Child Tax Credit so that you are well informed, and able to make the decision that’s best for you and your household.

Qualifying for the advanced Child Tax Credit

To qualify, you must:

  • Have filed a 2019 or 2020 tax return and claimed a Child Tax Credit on the return; or
  • Have given the IRS your information in 2020 to receive the Economic Impact Payment using the Non-Filers tool; and
  • Have a main home in the United States for more than half the year or file a joint return with a spouse who has a main home in the United States for more than half the year; and
  • Have a qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number: and
  • Have income limits of:
    • $75,000 or less for single taxpayers
    • $112,500 or less for heads of households
    • $150,000 or less for married filing joint and qualified widows and widowers

Income above those limits will receive $50 less for every $1,000 until the additional (enhanced) credit has been phased out.

Families above the phase out will still qualify for the regular credit until income reached $200,000 single and $400,000 married filing joint.

 

Amounts

  • $300 per month for each child under 6 (advance payments)
  • $250 per month for each child between 6 and 17 (advance payments)
  • $3,600 annual credit for each child under 6 (increased from $2,000 in 2020 and decreased by any advance)
  • $3,000 annual credit for each child between 6 and 17 (increased from $2,000 in 2020 and decreased by any advance)  

Important

It is important to understand that the IRS is using income information from previously filed tax returns to determine eligibility, and will then automatically enroll those who qualify for the advance payments. This means that EVEN IF YOU NO LONGER QUALIFY, but did qualify in the past, you will AUTOMATICALLY receive the advance payments without doing anything. These are payments for a credit on a 2021 tax return, which has not yet been filed. So, if you get overpaid in child tax credits, or if your financial situation changes this year, you may end up owing more money than anticipated come tax time. 

Anyone who receives the advance credits, but do not qualify, WILL have to pay them back.

Opting Out

Unenrolling from the advance payments may be wise or the conservative approach for many who will not qualify based on their 2021 income information. It might also be a smart move for those who are not sure at this time and for those who would like a larger refund when filing their 2021 tax return.

For Joint Filers: BOTH taxpayers must unenroll in order to opt out of receiving the advance payments.

Helpful Links

WARNING

If you prefer NOT to receive monthly advance Child Tax Credit payments because you would rather claim the full credit on your 2021 tax return, or you know you will not be eligible for the Child Tax Credit for 2021, you will need to UNENROLL (op-out).

Your Senter Team

As Clarkston, Michigan’s premier tax and accounting firm, you can count on us for all of your tax, accounting, and consulting needs. If you have questions or need assistance with the new Child Tax Credit, please Click Here to contact us, or give us a call at 248-934-0550.

We are here to serve you.

Filing an Extenstion

As many are well aware, the federal income tax filing due date for individuals, for the 2022 tax year, is approaching fast. Due date is Tuesday, April 18, 2023. If you feel you need more time, there’s no need to worry. Filing a tax extension is an option, and truthfully, it’s not nearly as frightening as it may sound.

2023 QuickBooks Online Improvements

Intuit constantly updates their system to provide their clients with the most up-to-date and efficient program possible. We’re proud to share their 2023 updates with our clients.

Make Your State & Federal Income Tax Payments Online!

Did you know that you have the option to make your state and federal income tax payments online? You can pay your state and federal income tax online, by phone, or with your mobile device using the IRS2Go app.

How to Register your Client Portal

Have you have received an email from Senter, CPA, P.C. with the subject “Senter, CPA, P.C. – Register Your Client Center Account”?

Below is a step-by-step guide on how to register your Client Center Account, or Client Portal.

2023 Price Increases

Thank you for choosing and trusting Senter, CPA, P.C. for all your tax and accounting needs. I am writing to let you know that there are some price increases going into effect for 2022 tax season.

2022 Senter, CPA Year in Review

Here at Senter CPA we had an incredible 2022. We’ve been busy assisting clients, contributing to our communities, and growing our team. We’ve added two full time TEAM members to our team who have greatly strengthened our service and capabilities. We’ve also added an annual tax season TEAM member who is an Enrolled Agent so you (and we) should notice an improvement to our turnaround time come the 2023 tax season. Wow! That will make us a TEAM of 6.

Welcome to the Senter, CPA Team – Rana Boykin

Rana Boykin is joining the Senter, CPA team as Seasonal Tax Accountant.

1099 Facts

With the end of the year rapidly approaching it may be time to think about issuing 1099’s.

Fact or Fiction for the Employee Retention Credit (ERC)

There are many people who may have question regarding the Employee Retention Credit (ERC) that became available for businesses during the Covid-19 pandemic.

Happy Thanksgiving

Happy Thanksgiving to all Senter, CPA, P.C. clients, team, friends, and community.

Since today is Thanksgiving, I wanted to share a few things that, myself and the rest of the Senter CPA team, are thankful for: