THE IRS has launched a new tool for parents to update their mailing address in order to receive Child Tax Credits.
The new feature, announced on Friday, allows families to update their location to "avoid mailing delays or even having a check returned as undeliverable."
"Any family can easily have their September check and all future checks sent to their new address by using the portal to make an address change request," the IRS stated online.
Families have until midnight on August 30 to update their address in order for the change to take effect for the September Child Tax Credit.
Read our Child Tax Credit live blog below for the latest news and updates…
- Julia Fields
CTC TOTALS
The CTC checks first began being cut back in July and are expected to continue through December.
This second batch of advance monthly payments totaled about $15 billion and reached some 36 million families.
The IRS verified that the “vast majority” of checks are being sent into bank accounts through direct deposit, but the agency noted that many checks “arrive in mailboxes” to those who choose them.
- Julia Fields
NEW DEADLINE
On Friday, the IRS declared that those hoping to receive their next mid-month CTC check must provide the agency with any new information before midnight on August 30 in order to “have the change take effect in September”.
The agency added: “Any of these changes made before midnight ET on August 30, will apply to the September 15 payment and all subsequent monthly payments, scheduled for October 15, November 15, and December 15.”
The CTC checks first began being cut back in July and are expected to continue through December.
- Julia Fields
50PERCENT OF FAMILIES UNAWARE OF EXTRA BOOST
Linda Smith, director of the Bipartisan Policy Center’s early childhood initiative, told CNBC: "The changes made by the American Rescue Plan stand to have an enormous impact on families and their childcare expenses."
"Switching the credit from non-refundable to refundable will reach more Americans because “many low-income families just simply don’t have a tax liability."
According to a Bipartisan Policy Center survey, almost 50 per cent of families aren't aware they can claim another tax break for child and dependent care expenses.
- Julia Fields
REFUNDABLE CREDIT
Families have, up until now, been able to claw back up to $3,000 in expenses per dependent, capped at $6,000.
But the $1.9trillion American Rescue Plan boosted this, raising eligible costs for 2021 to $8,000 – up to a maximum of $16,000.
Parents could receive up to 50 per cent of such expenses as refundable credit this year, depending on income.
It means their tax bill may be reduced, or they may be offered a refund – regardless of liability.
- Julia Fields
WHO IS ELIGIBLE FOR 'SURPRISE' STIMULUS?
Daycare before school at a city site also counts but a teenager watching your younger kids for a little extra allowance money does not.
Trying to claim anything that you’re paying off the books also isn't advisable since that income may not be claimed by the person you’re paying.
The expenses won’t be claimed in taxes until next year, but record-keeping throughout 2021 to be prepared is your best bet.
To get the child and dependent care tax credit, the filer’s adjusted gross income needs to be less than $125,000.
Any more than that and the credits will phase out at 50 percent.
Families earning $438,000 or more will be out of luck, since that’s when the credit phases out entirely.
- Julia Fields
FLEXIBLE CREDIT
For instance, if parents regularly use a babysitter in 2021, they will be able to claim that as a child care expense for this tax year when tax filing time comes around next year.
CNET reported that it will probably be easier to claim child care credits for people and groups working in an official capacity, such as a summer camp program or licensed daycare provider, rather than a local teen.
But the credit is somewhat flexible.
- Julia Fields
CHILD AND DEPENDENT CARE CREDIT
The credit is aimed at allowing people to return to work while not facing hefty bills for care costs in their absence.
"The Child and Dependent Care Credit can get you up to 50% of up to $8,000 of child care and similar costs for a child under 13, a spouse or parent who cannot care for themselves, or another dependent so that you can work (and up to $16,000 of expenses for two or more dependents)," Nerdwallet explains.
This credit is another part of the American Rescue Plan, passed in March, and can start being claimed for this tax year in 2022.
- Julia Fields
$8K 'SURPRISE STIMULUS'
Families with kids under 13 could get a "surprise" stimulus payment of $8,000 in the form of a tax credit for childcare expenses.
The new adjustments to the Child and Dependent Care Credit for 2021 mean that working American families who hit certain requirements will pocket thousands in extra stimulus funds.
It covers childcare costs up to $8,000, as well as costs for looking after a spouse or parent who can not care for themselves.
This increases to $16,000 in expenses for families with two or more dependents.
- Julia Fields
CHILD TAX CREDIT CALCULATOR
To find out if you qualify and, if so, how much you're due to receive via either direct deposit or a mailed check, you can use the child tax credit calculator on CNet's website.
On the tool, it will be explained how “the math and other requirements work in determining your family’s credit account” if your payment doesn’t add up, according to the outlet.
It will also teach you how to manage your child tax credit payments when signing up with the IRS and let you know what to look out for during next year’s tax season.
- Julia Fields
ARE COLLEGE STUDENTS ELIGIBLE?
College students or dependents age 18 through 24 will get a one-time payment of $500 in 2022 by the IRS.
- Julia Fields
WHAT IS 'ERROR CODE 2001'?
Numerous social media users have reported receiving an error code 2001 when using their ID.me account to log into the IRS website.
The error is accompanied by a message which reads: "A condition has been identified that's preventing your access to this service."
It's currently unclear what's causing the message to pop up.
If you receive the warning, be sure to contact the IRS directly.
- Julia Fields
HOW TO SIGN UP
To sign up for an ID.me account, you'll need a number of items to hand, including your Social Security number, a photo ID, and a phone or computer that has a camera.
- Visit the Child Tax Credit Portal and hit the blue button, and then press Unenroll from Advance payments.
- On the next page, press "ID.me Create an Account".
- Type in your email address and select a password.
- Hit "Create Account", accept the Terms and Conditions, and then press continue.
- Next, you'll be asked to confirm your email address before uploading a picture of your photo ID. If you want to use your phone, you will be sent text send a message with a link to take and submit your photos.
- You'll then enter your Social Security number and be asked to confirm all other information you've entered.
- ID.me will send you a text message confirming that you want to set up an account.
- Press "Allow and Continue" and the sign-up process will be complete.
- Julia Fields
WHY IS AN ID.ME ACCOUNT IMPORTANT?
The IRS, the Department of the Treasury, the Social Security Administration and other government agencies all use the ID.me tool to verify your identification.
Once you've been verified on a site that uses ID.me, you can use the same login information on any website that uses the secure log-in service.
Currently, the IRS is using the accounts for just its child tax credits.
If you wish to opt out of monthly CTC payments this year, in favor of a lump sum next, you will need this account with the IRS to do so.
If you already have an IRS account and username, you can use that instead.
- Julia Fields
NEW ONLINE PORTAL
Some Americans may be blocked from receiving their expanded child tax credit payments due to an error on the IRS' website.
To help eligible families track the status of their payments, the agency launched an online portal, however, users have to sign up by creating an ID.me account.
The account is essential for child tax credit (CTC) recipients to manage their upcoming payments, update their banking information, and for determining their eligibility.
However, some users have reported receiving an "error code 2001" during their setup process, which could potentially put their payments in jeopardy.
- Julia Fields
WHO QUALIFIES FOR THE CHECKS?
Single parents or parents who file their taxes as single will qualify for the full checks if they make $75,000 or less.
If you make more than $75,000, the monthly check is reduced by $50 for every $1,000 over the cap and eventually phases out completely.
Married couples who file taxes jointly and earn up to $150,000 a year qualify for the full payments, and the same situation applies where the payments eventually phase out.
- Julia Fields
HOW TO UNENROLL OF CTC
However, families must opt to pause their payments before the end of August if they wish to stop payments for September and beyond.
"Eligible families who make this choice will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return next year," according to the IRS website.
"To stop all payments starting in September and the rest of 2021, they must unenroll by 11:59 pm ET on August 30, 2021."
To stop payments, parents must use the unenroll feature in the Child Tax Credit Update Portal.
Source: Read Full Article