COVID-19 has caused so many problems from health, to economy, and overall disruption in our business and life…but there’s good news!
Yes, the good news is that the Biden Administration has provided some relief to help the American people.
Part of the help is providing you with weekly unemployment benefits to help the American people, (I recommend that you “click” on the Federal taxes box on your EDD bi-weekly submission) so that you don’t have to worry about paying taxes at the end of the year.
Also, some states have implemented additional benefits for example California has extended its unemployment benefits and is also offering additional State benefits to help Californians.
Here’s an update courtesy of my CPA
“Child Tax Credit 2021 Information
The American Rescue Plan has made changes to the 2021 child tax credit. Please review the following to see how this could affect your 2021 tax return.
The child tax credit is $3,600 for each child under age 6. That breaks down to $300 per month. For children ages 6-17, it’s $3,000 or $250 per month. Children who turn 17 in 2021 are among those who qualify. **Previously, children over 16 did not receive any child tax credit.
MAXIMUM CREDIT INCOME THRESHOLDS
Not every taxpayer will be eligible for the maximum child tax credit amount. Only taxpayers within the below thresholds will receive the maximum:
- $75,000 or less for singles,
- $112,500 or less for heads of household, and
- $150,000 or less for married filing joint and qualified widows and widowers.
If your adjustment income is above the thresholds, the additional credit above the normal $2,000 child tax credit will be reduced by $50 for every extra $1,000 in modified adjusted gross income.
ADVANCED CHILD TAX CREDIT
Eligible families will begin receiving advanced payments, either by direct deposit or check.
- The payments will be up to $300 per qualifying child under age 6.
- The payments will be up to $250 per qualifying child ages 6 to 17.”
Many of you have asked when the payments will be made and according to the IRS, it says the payments will be made on the 15th of each month unless it falls on a weekend or holiday. Payments will arrive either by direct deposit or in the mail as a paper check or debit card.
- July 15, 2021
- August 13, 2021
- September 15, 2021
- October 15, 2021
- November 15, 2021
- December 15, 2021
Many of you have asked if you should take a lump sum or monthly payments If you’re able to take a lump sum then I personally would recommend a lump sum at the end of the year, but if you are struggling financially and could benefit from the monthly help then select the monthly vs at the end of the year. Remember your situation is unique and only you know your situation therefore make sure you analyze it before making a decision.
Remember that one of the reasons there was a push for the monthly payment was to help cut childhood poverty because parents who have a lower income were struggling to make ends meet and could benefit from getting the monthly payments to help with immediate needs such as; food, diapers, clothing, child care or whatever is needed at the moment.
Therefore, if you’re someone who doesn’t need the money right away and who maybe anticipates having to pay taxes to the IRS, you could opt-out and know that the full amount will be available at tax time.