now, you can use the tool to see where you stand under the current plan. Current Child Tax Credit Amount The current child tax credit is $2,000 per qualifying child. It's gradually phased-out (but not below zero) for joint filers with an adjusted gross income (AGI) of $400,000 or more and for other taxpayers with an AGI of $200,000 or more. lthough it's still subject to change, President Proposed Phase-Out Scheme Biden's $1.9 trillion stimulus package includes Under the bill passed by the Senate, the 2021 a provision that would temporarily increase increase (i.e., the extra $1,000 or $1,600) would be the child tax credit from $2,000 to $3,000 per child gradually phased-out for joint filers with an AGI of ($3,600 for children 5 years old and younger) for $150,000 or more, head-of-household filers with an the 2021 tax year. It would also authorize periodic AGI of $112,500 or more, and all other taxpayers with "child allowance" payments to families from July to an AGI of $75,000 or more. However, the increase December. Half the total credit amount would be paid can't be reduced below zero (other limitations to this in advance with the periodic payments, while the reduction would apply as well). other half would be claimed on the tax return that After any reduction of the increased credit amount you'll file next year. is calculated, the current phase-out would then be However, not everyone would get the additional applied to the remaining credit amount. So, for joint amount under the president's plan. And some families filers with an AGI of $400,000 or more and other would not get any credit (or periodic payment) at taxpayers with an AGI of $200,000 or more, the credit all. That's because the credit would be reduced – or would be subject to an additional reduction – possibly even eliminated – for people with an income above to $0. a certain amount. In fact, there would be two "phaseProposed Periodic Payments out" rules in play – one just for the extra $1,000 (or Once the credit amount is determined, 50% of it $1,600) amount and one for the remaining credit. would be paid in advance with periodic payments That makes calculating the total credit and periodic under the current bill before Congress. But those payments very tricky. periodic payments would only run from July to The massive stimulus package was already passed December 2021. (We're expecting monthly payments, by the House once. However, since the Senate later but the advance payments could be based on a passed the bill with amendments, it has to go back to different schedule.) The remaining 50% would be the House for an additional vote before it can be sent claimed as a credit on the taxpayer's 2021 tax return. to the president for his signature. But if you don't The IRS would also be required to create an online want to wait until final passage to see how much portal so that people could update their income, money you would get, answer the four questions in marital status, and the number of qualifying children. the calculator below and we'll give you a customized You could also use the portal to opt out of the estimate of the amount you would receive in advance periodic payments if you want to take the full child from July to December (assuming monthly payments) credit on your 2021 return instead. and how much you would be able to claim as a child Complicated……..yes. That is why we are here. tax credit on your 2021 tax return. Again, the child Come by and we will handle all of your tax needs at tax credit proposal could change before final passage, Liberty Tax Service, 405 E. Dixie Drive in Asheboro or which could then affect how much you get. But, for call 336-624-9524.
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2021 CHILD TAX CREDIT
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Ryan Dodson has a Masters in Accounting from North Carolina State University. He worked in public accounting with Deloitte and Arthur Andersen. He and his wife Tiffany own and operate Liberty Tax Service. 405 East Dixie Drive•Asheboro, NC 27203 (336) 629-4700 12 | asheboromagazine.com
