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IMPORTANT UPDATE: IRS Opens Portals for Advanced Child Tax Credit Payments 2021

Client Alert
May 20, 2021

UPDATE

The IRS opened two portals for the Advanced Child Tax Credit payments. Taxpayers who wish to opt-out of the advanced child tax credit payments will need to use the “unenroll from advanced payments” portal. Taxpayers who were not required to file a tax return and have not already submitted his/her information should use the “enter your information” portal to receive the advanced child tax credit payments. The portals can be found at https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.

May 20, 2021

The American Rescue Plan Act (the “Act”) expands the Child Tax Credit for tax year 2021. In addition to expanding the Child Tax Credit, the Act provides for advance payments of the 2021 Child Tax Credit.

Beginning in July, the IRS will automatically send Advanced Child Tax Credit payments to eligible taxpayers based on their 2020 tax return (or 2019 tax return if the 2020 tax return has not been filed and processed yet). The amount of the advanced payment will be up to $300 each month for each qualifying child under 6 years old at the end of 2021 and $250 each month for each qualifying child between 6 and 17 years old at the end of 2021. For example, if you have 2 qualifying children, one 4 years old and one 8 years old, you may receive up to $550 each month in advance child tax credit payments.

These payments are an advance on the child tax credit a person will claim on his/her 2021 tax return. Therefore, when a person files his/her 2021 tax return, the child tax credit amount will be reduced by the total amount of advance child tax payments received between July and December. That means that you may be required to repay some or all of the advanced child tax credit on your 2021 tax return.

Who is an eligible taxpayer?

Eligible taxpayers are:

  • Married taxpayers filing a joint return or Qualifying Widows with income up to $150,000;
  • Head of Household taxpayers with income up to $112,500; and
  • All other taxpayers with income up to $75,000.

Who is a qualifying child?

A qualifying child is one who:

  • Has a valid social security number
  • Lived with the eligible taxpayer for at least half the year
  • Is related to the eligible taxpayer
  • The eligible taxpayer provides more than 50% of the child’s support

What does this mean?

This means that unless a person opts out, he/she will automatically receive advance child tax credit payments. Therefore, the refund amount you are expecting may be reduced. This also means that parents that alternate claiming a dependent on their tax returns may now owe money to the IRS in 2021 rather than receiving a refund.

In the coming months, the IRS has stated taxpayers will have the opportunity to opt out of the advance child tax credit payments. The IRS has also stated taxpayers will have the opportunity to update information with the IRS such as filing status or number of qualifying children.

For additional questions related to the advance child tax credit payments, please contact BMD Tax Law Attorney Tracy Albanese at tlalbanese@bmdllc.com or (330) 253-9195.

Tax LawTracy L. AlbaneseChild Tax Credit
Client Alert

Value-Based Care Advances – CMS Issues New Final Rules for Stark and Anti-Kickback Statutes

December 11, 2020The Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”) Office of the Inspector General (“OIG”) issued two highly anticipated (and quite extensive) Final Rules to reform the Stark Law and Anti-Kickback Statute (“AKS”) regulations. The Final Rules generally take effect on January 19, 2021. The Final Rules include new safe harbors for the AKS and new exemptions to the Stark Law to allow for greater flexibility. According to the HHS, the goal of updating both laws is to make it easier for providers to engage in care coordination and value-based care programs without running afoul of the statutes. Please note that this client alert could not cover the full extent of the Final Rule changes so please contact your BMD Healthcare attorney with questions.Client Alert

Mandatory Filings Under CFIUS New Rules

December 11, 2020On September 15, 2020, the Committee on Foreign Investment in the United States (“CFIUS”) promulgated a final rule modifying its mandatory declaration requirements for certain foreign investment transactions involving “TID US businesses” (sensitive U.S. businesses dealing in critical technologies, critical infrastructure and sensitive personal data) dealing in “critical technologies” – i.e., U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies. The new rule also makes amendments to the definition of the term “substantial interest” (used to determine whether a foreign government has a substantial interest in an entity). The final rule became effective on October 15, 2020.Client Alert

IRS Guidance on Employee Retention Credit

December 11, 2020The Employee Retention Credit created under Section 2302 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Since the adoption of the CARES Act, employers have expressed concern that if one employer acquires another employer that previously received a PPP loan, the acquirer’s entire aggregated group may no longer be eligible to claim the Employee Retention Credit.Client Alert

International Sales Contracts - COVID-19 Pandemic and Force Majeure

December 11, 2020Client Alert

Identity Protection PIN Available to ALL Taxpayers in January

December 11, 2020Beginning in January 2021, the IRS will allow all taxpayers who can properly verify his/her identity to obtain an Identity Protection PIN. An Identity Protection PIN (“IP PIN”) is a six digit number assigned to a specific taxpayer to assist in preventing the misuse of a taxpayer’s social security number on fraudulent federal tax returns. Previously, only confirmed victims of identity theft who resolved his/her tax issues with the IRS were eligible for an IP PIN.
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