Cbo Expects Economy To Remain Weak Through 2021
CBOs latest economic and budget projections show that the unemployment rate will remain above 10 percent through the end of the year and that it wont return to the levels in CBOs pre-pandemic economic projections until late in the decade. CBO projects that the unemployment rate will be 9.4 percent early next year when people will file for their EITC and Child Tax Credit refunds, will average 8.4 percent for all of 2021 , and wont drop below 6 percent until mid-2024. CBO also projects that real GDP over 2020-2021 will be 6.7 percent below CBOs forecast from January 2020. The even-more-recent projections of the Organisation for Economic Co-operation and Development, issued on July 7, are more pessimistic, forecasting an unemployment rate averaging between 8.5 percent and 11.5 percent in 2021, depending on the scope of the pandemic.
This deep economic weakness means that additional and aggressive fiscal policy measures will be needed, and for an extended period of time, to strengthen demand in the economy.
Who Can Access The Colorado Child Tax Credit
The Colorado Child Tax Credit will be available to Colorado residents with incomes of $75,000 or less with children under age six as of December 31, 2022 who qualify for the federal Child Tax Credit. Children under age six who would qualify for the federal Child Tax Credit if they had a social security number will qualify for the Colorado Child Tax Credit.
Child Tax Credit And Shared Custody: What Parents Need To Know
Which parent gets the monthly checks? Should parents who share custody of a dependent opt out of advance payments? We’ll explain.
Make sure you’re not receiving advance payments of a credit you’re not actually entitled to claim.
There are a lot of questions about this year’s advance child tax credit for divorced, separated and unwed parents who share custody. The IRS has specific rules that are different from prior years, including which households qualify and how the payments are disbursed upfront in monthly installments. Since the rollout of payments began, the IRS has issued guidelines for families who might be concerned about eligibility or about owing the tax agency money in 2022.
The IRS determined who would start receiving the advance credit this year based on the dependents you claimed on your 2020 tax return . So if any of your household circumstances have changed since then, including a shift in primary custody or marital status, the tax agency is encouraging parents to unenroll from the advance monthly payments. The key to doing that is the Child Tax Credit Update Portal, which we’ll explain below.
Recommended Reading: What Tax Form Does Doordash Use
How Do The Monthly Advance Payments Of The Child Tax Credit Affect The Credit On The Tax Return For 2021
The IRS estimated the advance payments based on the number of dependent children reported on a taxpayers prior year return. If taxpayers claim more or fewer eligible children for 2021, the total payment amount may be more or less than their actual credit. If, as will be the case for most taxpayers, the advance payments constitute less than a taxpayers entire annual child tax credit, the taxpayer can claim the remaining undistributed credit balance on their 2021 tax return.
If a taxpayer received advance payments that exceeded their total credit for the year, they may be required to repay the excess when filing their return. However, repayments for low-income taxpayers and repayments of small amounts generally will be waived.
Whos Eligible For The Child Tax Credit
If you had a baby in 2021, you should review the list of eligibility requirements for the child tax credit. Here are a few of the requirements you must meet:
Taxpayers must have a qualifying child as defined by the IRS. This includes a son, daughter, or stepchild that does not provide more than half of their own financial support and is claimed as a dependent on the taxpayers return.
The child must be a U.S. citizen, national, or resident alien.
Taxpayers main home is located in the U.S. for more than half the year.
You must also meet income requirements to claim the child tax credit. An individuals modified adjusted gross income must be $75,000 or under to claim the maximum credit of $3,600 for a newborn baby in 2021. If the modified AGI is above the threshold, the credit begins to phase out. For 2021, the credit phases out in two different steps. We will discuss this below.
If youre a noncustodial parent, you may also claim the child tax credit. The other parent must grant you permission to claim the child. Only one person may claim the child each year and qualify for the child tax credit. They will need Form 8332, Release/Revocation of Release of Claim Exemption for Child by Custodial Parent. This form shows that the noncustodial parent has authorization to claim the child for the tax year shown.
Recommended Reading: Doordash Taxes For Drivers
Check Out More Child Tax Credit Resources
- Free Tax Filing: This webpage lists free in-person and virtual tax filing resources you can use to get half or all of your CTC. These resources include help from IRS-certified volunteers to file your taxes.
- Child Tax Credit Update Portal Guide: Use this guide for step-by-step instructions on how to sign-up for and use CTC UP to make changes to your CTC information or opt-out of CTC advance payments.
- ChildTaxCredit.com: This website features FAQs and a CTC eligibility calculator that can help you understand how much you can get from the credit.
- LetsGetSet.co: This website offers tools and resources to help new parents making less than $40k access and save tax credits. New and expecting parents can sign up for texts by using this link via a web browser on their phone: letsgetset.link/getitback or by texting CTC to 844-921-5747 to stay informed about key updates in the portals , get links to resources, and text-in questions.
- 2021 Child Tax Credit Outreach Resources: Interested in spreading the word about the Child Tax Credit? This outreach hub features a CTC outreach toolkit, navigator training and resources to help people sign-up for advance payments, multilingual CTC outreach resources, research on CTC-eligible households, and more.
How Can I File My Tax Return Electronically
If you prefer to file your tax return electronically, please go to you can go to myfreetaxes.com or the IRS Free File website which shows you a lot of options for filing online. You can use IRS Free File beginning January 14, 2022 however, your tax return will be held until processing beginning on January 24, 2022.
Don’t Miss: Tax Form For Doordash
What Is The Child Tax Credit Update Portal Used For
The IRS Child Tax Credit Update Portal allows you to opt out of advance CTC payments. You may want to do this if you arent eligible for the advance payments or if you prefer to receive the full refund when you file your 2021 tax return . See Question 17 to understand more about opting out of payments. You can also add or change bank account information to get direct deposit, change the address where your payments are mailed, and update your income.
Later in the year, the CTC portal may allow you to make other updates, including updating the number of dependents you have, your income, or your marital status. For example, if you have or will have a new baby this year, you will be able to update your number of qualifying children on the CTC portal. Life changes can affect the amount of CTC you are eligible for. Making updates will help make sure that the IRS is sending you the correct amount of your CTC.
Northwest Territories Child Benefit
This benefit is a non-taxable amount paid monthly to qualifying families with children under 18 years of age.
You may be entitled to receive the following monthly amounts:
Children under the age of 6:
- $67.91 for one child
- $163.00 for four children
- $24.41 for each additional child
If your adjusted family net income is above $30,000, you may get part of the benefit.
These amounts are combined with the CCB into a single monthly payment.
This program is fully funded by the Northwest Territories.
Don’t Miss: License To Do Taxes
The Wrong Parent Claimed Our Child And Is Getting The Child Tax Credit Advance Payments Without My Permission What Can I Do To Get The Payments
This can be a complex tax matter. If the non-custodial parent has not filed 2020 taxes and is not planning on claiming the child for 2020, you can file a 2020 tax return or go to www.getctc.org to get the payments.
If the non-custodial parent is getting the advance payments based on filing their 2020 taxes, the situation is more complicated. One of the scenarios below may match your situation and give you more options.
- My ex-spouse claimed our child for the Child Tax Credit without my permission. The child lives with me for more than half of the year. My ex-spouse is now receiving the CTC advance payments.
- I am divorced. I claimed my child for the Child Tax Credit, but my 2020 tax return was rejected because my ex-spouse claimed our child first. My ex-spouse is now getting the CTC advance payments even though my child lives with me.
- I am unmarried and my child lives with me for most of the year. My co-parent and I take turns claiming our child on our taxes and 2020 was my year. My co-parent filed taxes before me and decided to claim our child on their 2020 tax return because they wanted the CTC advance payments.
If you cannot reach an agreement, or are unable to speak with the person, consider the options below. If you havent filed a 2020 tax return, you may want to do so to claim your child and provide the IRS with more current information about your family situation.
It can take up to 60 days to receive a response from the IRS.
My Tax Return Was Amended And Is Still Being Processed Is That A Problem
Yes, said Steber. Also, tax returns that are currently being held for review by an IRS employee and there are 35 million of these returns may also face delays, he said.
“The IRS has made it kind of clear that you have to have to have a completed tax return on the IRS system,” Steber said. “If you have a tax return caught up in the error resolution system and there is an abundance of situations that can turn into that if it’s not completely processed, we understand those returns are affecting the advanced payments” for the CTC.
In that case, taxpayers may get the CTC payments when their return is processed. For instance, if the return is processed in September, the CTC payments could begin in October. But if a return isn’t processed until after the advanced payments for the CTC end in mid-December, the taxpayer will receive the entire CTC credit when they file their taxes in early 2022.
Recommended Reading: Does Doordash Take Out Taxes For Drivers
How Do You Claim The Child Tax Credit
You can claim the child tax credit on Schedule 8812, Credits for Qualifying Children and Other Dependents. This schedule is part of Form 1040, U.S. Individual Income Tax Return. Taxpayers will have to show proof that they are eligible to claim the credit. Some of the documents used to prove this are:
Social Security Card
Proof of health insurance/medical expenses paid
Child care records
A complete list of documents that can help you claim the child tax credit is on Form 14815, Supporting Documents to Prove the Child Tax Credit and Credit for Other Dependents for 2018-2025.
Families that received advance payments in 2021 will need Letter 6419 to file their tax return. The IRS sent this letter to taxpayers from late December 2021 through January 2022. This letter will show the total amount of advanced payments made to you in 2021. It will also include how many qualifying children were used to calculate the payment.
A Childs Age Determines The Amount
A childs age helps determine the amount of Child Tax Credit that eligible parents or guardians can receive. For 2021, eligible parents or guardians can receive up to $3,600 for each child who was under 6 years old at the end of 2021, and up to $3,000 for each child who was between the ages of 6 and 17.
Recommended Reading: How To File Taxes For Doordash
How To Qualify For The Child Tax Credit
You can take full advantage of the credit only if your modified adjusted gross income is:
Single: under $75,000.
The credit begins to phase out above those thresholds.
First phaseout: Income exceeds the above thresholds but is below $400,000 or $200,000 . Your total credit per child can be reduced by $50 for each $1,000 . This phaseout will not reduce your credit below $2,000 per child.
Second phaseout: Income exceeds $400,000 or $200,000 . The phaseout will continue docking $50 per each $1,000 and begin to reduce your credit per child below $2,000. You may be disqualified from the credit altogether.
Low-income families who may not normally file a tax return can use the IRS’s non-filers sign-up tool to register for the monthly advance child tax credit payments.
Some of the other child-related eligibility requirements for the child tax credit include:
You must have provided at least half of the childs support during the last year, and the child must have lived with you for at least half the year .
The child cannot file a joint tax return.
What Is The Impact Of The Child Tax Credit On My Taxes
The child tax credit can have a significant impact on your taxes. If you are eligible for the child tax credit, it may reduce your overall tax bill by up to $3600 per child. In addition, you can use the child tax credit to offset your income taxes. For example, if you owe $4000 in income taxes, the child tax credit could reduce your tax bill to $400. You can then save your refund or use it to invest and grow your wealth.
You do not have to pay back the child tax credit. Even if you owe no income taxes, you can claim the child tax credit. The child tax credit is a refundable credit, which means that if you qualify for the credit, you will receive a refund for any unused portion of the credit.
Recommended Reading: How Do Doordash Taxes Work
Am I Eligible For The 2021 Child Tax Credit
There are three main criteria to claim the 2021 CTC:
To claim children for the CTC, they must pass the following qualifying child tests:
Relationship: The child must be your child, grandchild, stepchild or adopted child younger sibling, step-sibling, half-sibling, or their descendent or a foster child placed with you by a government agency. Note: if you are the childs legal guardian, that is considered a child placed with you by a government agency.
Age: The child must be 17 or under on December 31, 2021.
Residency: The child must live with you in the U.S. for more than half the year. Time living together doesnt have to be consecutive. There is an exception for non-custodial parents who are permitted by the custodial parent to claim the child as a dependent .
Taxpayer Identification Number: Children claimed for the CTC must have a valid social security number .
Support: The child does not provide more than half of their own support in 2021.
Dependency: The child must be considered a dependent for tax filing purposes.
Were Advance Child Tax Credit Payments Subject To Levy Or Garnishment Or Offset
Advance Child Tax Credit payment were not reduced for overdue taxes from previous years for other federal or state debts that you owed. Advance Child Tax Credits were not offset, if your spouse or you owed past due child support. However, advance Child Tax Credit payments were not exempt from garnishment by non-federal creditor under law.
Also Check: How To Find A Companys Ein
How Will Filing Taxes Change Next Year
Hereâs the general process to expect when claiming the child tax credit on your 2021 tax return:
When you claim the child tax credit on your 2021 taxes, you will calculate the exact credit you qualify for based on your final 2021 income, subtract the amount of your advance payments , and then the remaining amount will further reduce your tax liability . Ideally, you should have received half of your eligible CTC through monthly payments and then you can claim the second half as a lump sum when you file your taxes.
Because the 2021 CTC is fully refundable, tax filers who previously claimed the additional child tax credit likely wonât need to claim it for 2021. Otherwise, most people wonât notice dramatic changes on their 2021 taxes.
For more on filing your taxes, read our guide to filing income taxes.
Get essential money news & money moves with the Easy Money newsletter.
Free in your inbox each Friday.
Sign up now