BLUE FOX | Accounting for Nonprofits and Social Enterprises
  • Accounting Services
    • Employee Retention Credit (ERC) Eligibility
  • Tax Preparation
    • Tax Deadlines
  • About
    • Our Founder & CEO
    • Our Team
    • Our Clients
    • Now Hiring: Bookkeeper
    • Our Philosophy
    • Benefits of Outsourced Accounting Services for Nonprofits
    • Technology Solutions
    • Testimonials
    • FAQs
    • Join the Team >
      • Now Hiring: Tax Specialist (Remote)
  • Blog
  • Freebies
  • Contact
  • Subscribe

The 2021 Child Tax Credit Advance - What Parents Need to Know

4/14/2021

0 Comments

 
Picture
**The content in this blog was updated on June 29, 2021, to reflect the updates to the Child Tax Credit.

Attention parents who are taxpayers! (That should be all of you, ha-ha). The recent changes to the 2021 child tax credit are something you should understand. Yes, the tax credit will help struggling families. However, for families that do not need extra financial support, your action is required to opt-out. If you don’t (said in our best Liam Neeson voice), your 2022 tax return and refund may be way out of whack.

Families will start seeing these automatic monthly credit amount payments for half of the Child Tax Credit (CTC) from the IRS as soon as July 15, 2021. When you file your 2021 income tax return, you will claim the other half. 

We know there are lots of questions and scratching your head moments when it comes to the CTC and opt-out so we broke down the most important things you need to know now.

Quick Facts on the CTC: 
  • The IRS is using past tax returns to estimate those that should receive these advanced payments from this credit. Use your best discretion [or ask the experts, wink wink, our team at Blue Fox] on whether or not you should opt out. ​Here’s why: Based on your 2021 income, you might need to pay back the advance payments when you file your tax return. 
  • If you rely on the child tax credit to help balance out your year-end tax bill, you could find yourself owing money at the end of the year. 

Next steps to take

Check your mail.
The IRS is mailing out notices to those they think should receive the Advance Child Tax Credit payments. Don’t worry if you are eligible or owed the credit, you will receive it when you file your 2021 tax return.


Opt-out. Visit this link directly [click here] to the IRS website to unenroll from receiving these tax credit payments.

Record payments received. You will need to know for your tax return next year how much you received from these advanced payments if you are receiving them. Don’t assume that the IRS will keep track of this for you. Contact your tax professional for more advice on how to proceed with the next best step for you. And as always, if you have questions, our friendly tax team is available to help at (321) 233-3311 and hello@yourbluefox.com. 

What is the 2021 Child Tax Credit?
Under the new American Rescue Plan, the child tax credit amounts have increased from $2,000 per child to $3,000 per every child between the ages of 6 and 17, and $3,600 for every child under the age of 6. If you have a dependent who is 18 years old, you can receive a $500 payment for them [this includes dependents ages 19 to 24 who are currently full-time college students].

Who gets it?
If you normally receive the child tax credit on your 1040, you'll be automatically opted into an advanced payment of the credit for quarterly payments. Every taxpayer with a child on their 2019/2020 taxes, will start getting tax money. Once the credit amount is determined, 50 percent of the amount will be paid in advance payments from July to December 2021. The remaining 50 percent will be claimed as a credit on the taxpayer’s 2021 tax return.

2021 Child Tax Credit Calculator 
Are you wondering how this new tax credit will affect you? Use this handy tax credit calculator to find out. Note: you will need information from your 2019 tax return. 

Need more help? 
Our team at Blue Fox is up to speed on the latest tax law changes, and there are many. As you can imagine, tax preparation has never been more complex or intricate than it is this year. 


Picture
Here are some other articles you might enjoy reading:
Personalized Tax Services for Independent Contractors and Sole Proprietors
Worried About Identify Theft? IRS Recommends This for Identity Theft Prevention​
How to Handle Taxes for Your Side Hustle 
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Our Blog

    Welcome to the Blue Fox Blog! A fairly entertaining source of info and news related to our company, nonprofits, social sector trends, and, of course, accounting. Enjoy!

    Subscribe

    Top Articles

    Back to Basics: How to Set Up Your Nonprofit Chart of Accounts

    How "Small" Payroll Mistakes Cause Multi-Year S#!t Storms for Nonprofits


    Behind the Scenes, New Client Onboarding Call

    When to Hire a Tax Professional - 10 Factors to Consider

    40+ Ideas to Light a Fundraising Fire Under Your Nonprofit Board Members

    Why Outsource Your Nonprofit Accounting to Blue Fox?  Ask One of Our Newest Clients

    Client CASE STUDY: One of The Most Financially Sustainable Nonprofit Orgs We Know

    The Magical Nonprofit Financial Ratio Matrix

    10 Reasons to Outsource Your Nonprofit Accounting
    ​
    How to Make Your Nonprofit Recession-Proof


    ​How to Engage Your Board of Directors in Financial Conversations

    QB Tip of the Month: How to Use Classes for Painless Grant Writing
    ​
    When to Hire an Accountant for Your Social Impact Org

    Are You Paying Too Much for Payroll?

    Company News

    Blue Fox Teams Up With Bloomerang to Develop Nonprofit Resources

    Blue Fox Earns Better Business Bureau Accreditation

    Blue Fox Launches Protected By Logo
    ​
    Blue Fox - The Origin Story
     

    Categories

    All
    Blue Fox Foundation
    Company News
    For Individuals
    For Nonprofits
    For Social Enterprises
    Press Announcements

    Archives

    March 2023
    January 2023
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    November 2018
    October 2018
    September 2018

    RSS Feed

Request A Quote

Services

Subscribe

Contact

Disclaimer


Picture
Picture
NTEN Nonprofit Technology Network Member
QuickBooks Certified ProAdvisor
Picture
Picture
Picture
Picture
Picture
Picture
Certified Financial Planner
Picture

BLUE FOX
Phone:
(321) 233-3311, Email: hello@yourbluefox.com
Mailing Address: 2542 Woodfield Circle, Melbourne, FL 32904
Copyright © 2023 - All Rights Reserved
​
​Holiday office closures:
To give our employees time to unplug and refresh with their family and friends, the Blue Fox virtual office closes 
for all federal holidays, the week of Thanksgiving, and the week between Christmas and New Year's Day.
  • Accounting Services
    • Employee Retention Credit (ERC) Eligibility
  • Tax Preparation
    • Tax Deadlines
  • About
    • Our Founder & CEO
    • Our Team
    • Our Clients
    • Now Hiring: Bookkeeper
    • Our Philosophy
    • Benefits of Outsourced Accounting Services for Nonprofits
    • Technology Solutions
    • Testimonials
    • FAQs
    • Join the Team >
      • Now Hiring: Tax Specialist (Remote)
  • Blog
  • Freebies
  • Contact
  • Subscribe