Your clients probably have questions about opting out, payment timelines, and how much they’ll receive.
Before we dive into those topics, let your clients know August 2nd is the deadline to skip the August 13th payment.
1. The client’s 2021 income will be above the thresholds ($75,000, $112,500, $150,000), and the client doesn’t want to repay the advance.
2. Financial situation. “I don’t need the money. I’d rather have a bigger refund next April.”
- The advance is paid based upon an income threshold. What is that?
The full credit is available if the client's AGI is below $150,000 MFJ, $112,500 head of household, $75,000 single. Child Tax Credit phases out by $50 for each $1,000 (or fraction thereof) by which AGI exceeds these income thresholds.
The IRS uses these numbers from the 2020 return to determine the advance. Actual 2021 AGI determines the accurate credit. EXCESS advances must be paid back.
- How can my client get the benefit if their child was born in 2021 or if they gained custody of a child in 2021?
The IRS created the Child Tax Credit Update Portal where families can tell the IRS about children born in 2021 or about changes in child custody.
- My client changed their bank account or now wants direct deposit. Can they go to the portal for that?
YES. The client can provide or update bank account information for direct deposit at the portal. The portal is also the place to tell the IRS about things that affect the amount of the advance payment, such as a change in the number of kids, marital status, or income.
- Will my clients continue to get monthly payments next year?
The AMERICAN RESCUE PLAN ACT only expands the child tax credit for one year -2021. President Biden has proposed extending the expansion through 2025 as a part of the American Families Plan. Democrats hope to make the program permanent.
