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2021 Advance Child Tax Credit Payments FAQ
May 23, 2021
November 1, 2021
The IRS recently answered a number of common questions about the 2021 Child Tax Credit (CTC) advance payments that Americans began receiving in mid-July. Here are the highlights:
Do I have to pay tax on the CTC Advance Payments?
No. The CTC is a tax credit. As long as you qualify for the credit, the advance payments do not count as income and are not taxable. You can check your eligibility using the IRS Advance CTC Eligibility portal (link below).
Will Advance CTC Payments disqualify me for other federal programs?
No. Because these payments are not income, they will not affect eligibility for federal programs with income limits, like the Earned Income Credit, Pell Grants, or higher education credits.
Will Advance CTC Payments disqualify me for other federal programs?
No. Past-due taxes, overdue child support, and other federal or state debts will not affect CTC advance payment amounts. However, these issues may affect a taxpayer’s final CTC amount when they file their 2021 tax return, possibly reducing their refund or increasing their tax. Also, some states do allow reduction of CTC advance payments to cover a taxpayer’s private debts.
I’m eligible for the 2021 CTC but my advance payments are delayed?
The most common reason for a delay in receiving advance CTC payments is that the IRS does not have your current mailing address or banking information. Check the IRS Advance CTC Update portal (link below) to see if you need to update your info. The IRS is also withholding advance CTC payments to victims and possible victims of tax-related identity theft, to prevent further fraud. These payments will be sent when the ID theft cases are resolved.
If you are unsure whether it is best for you to accept CTC advance payments, or to opt out and claim the entire credit when you file your 2021 tax return, a tax professional can help you decide.
IRS Advance CTC Eligibility portal: https://www.irs.gov/credits-deductions/advance-child-tax-credit-eligibility-assistant
IRS Advance CTC Update portal: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal
Did you know?: Offset Refund Amounts
May 23, 2021
November 1, 2021
If your refund amount is different than stated on the filed tax return, part or all of your refund may have been used to pay off (offset) past-due federal tax, student loans, state income tax or other past-due debts.
You’ll receive a notice from the IRS if such an offset occurs that will show the original tax refund amount, the offset amount, as well as the name, address and telephone number of the agency receiving the payment.
If you haven’t received your refund yet, you may be able to check the status using the IRS’ “Where’s my Refund?” tool: https://www.irs.gov/refunds.
Upcoming Tax Deadlines
May 23, 2021
November
Day |
|
01 |
Certain Small Employers – Certain small employers. Deposit any undeposited tax if your tax liability is $2,500 or more for 2021 but less than $2,500 for the third quarter. |
01 |
Employers – Federal unemployment tax. Deposit the tax owed through September if more than $500. |
01 |
Employers – Social security, Medicare, and withheld income tax. File Form 941 for the third quarter of 2021. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until November 10 to file the return. |
10 |
Employees Who Work for Tips – If you received $20 or more in tips during October, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return. You can use Form 4070. |
10 |
Employers – Social security, Medicare, and withheld income tax. File Form 941 for the third quarter of 2021. This due date applies only if you deposited the tax for the quarter timely, properly, and in full. |
15 |
Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in October. |
15 |
Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in October. |
December
Day |
|
10 |
Employees Who Work for Tips – If you received $20 or more in tips during November, you must report them to your employer (employees are required to keep a daily record of tips). All tips must be reported on your individual income tax return. You can use Form 4070. |
15 |
Corporations – Deposit the fourth installment of estimated income tax for 2021. A worksheet, Form 1120-W, is available to help you estimate your tax for the year. |
15 |
Employers – Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments made in November. |
15 |
Employers – Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments made in November. |
Posted on November 1, 2021