The IRS has updated the rules regarding the Advance Child Tax Credit that some of you may have started receiving already. Some taxpayers may have to repay the advance of the Child Tax Credit with their tax return filing if their income exceeds certain thresholds. The rules get very complex very fast, but our general guideline is that if your AGI exceeds $75,000 for single filers, $112,500 for head of household filers, or $150,000 for married filing jointly filers, then it’s likely you will have to pay back some or all of the additional child tax credit specific to 2021 ($1,000-$1,600 per child). If your 2021 income will be the same as 2020, the IRS should be sending you the appropriate amount of advanced payment. If your income for 2021 now exceeds these thresholds, we are recommending that you set aside those funds with the expectation that you may have to pay a portion of it back with your tax return. We are not recommending at this time that you opt out of the advance credit, but want you to be aware of the consequences with your tax return. We will not be surprised if there are more changes to this credit in the future.
The IRS has a portal where you can log in and update your information, as well as opt out if you choose, for the advance child tax credit. You can set up your access via this link.
**Eger CPA is committed to helping you with this tax credit and any other tax and accounting services you or your small business may need. Please contact us and we would love to discuss how we can help. CONTACT US NOW!