NORTHWEST, Ark. (KNWA/KFTA) — Looking ahead, you now have about a month left to file your 2020 tax returns.
The big news right now is the IRS commissioner announced they are on track to start sending advanced payments on the new child tax credit starting in July.
Now here’s the breakdown. There are several benefits under the American Rescue Plan Act of 2021.
First, the maximum age for the child tax credit was raised from 16 years old to 17 years old. For every child under 6 years old families will receive $3,600. For children between the ages of 6 and 17 that amount is $3,000.
Grass Root Taxes, Enrolled Agent, Diane Hagerty tells us starting in July, if there are no glitches families will start getting an advance on next year’s credit.
Families will receive six payments from July to December of 2021. That is $300 for children under 6, and $250 for older children, but you must file your taxes to receive it.
“They are basing it on your 2020 tax return. So if you haven’t filed your 2020 tax return please do that immediately… so they can start sending you your child credit payments in advance,” said Hagerty.
Families will receive the other half or the rest of the payments when you file your taxes in 2022.
The credit is also fully refundable, with no minimum income requirement. That means even if you don’t make enough income to pay taxes you can still qualify for the credit.
Families must meet eligibility requirements to receive the higher credit.
Some taxpayers will also get a tax break on their unemployment benefits under the American Rescue Plan.
At the start of tax season, unemployment benefits were considered taxable income and that has changed, depending on the amount.
Hagerty says if you received less than $10,200 in unemployment benefit it is no longer taxable. This means you will not have to pay taxes on the benefits you received.
If you filed your taxes before the change, you can expect a refund.
“The IRS is encouraging people not to file an amended return and just wait for correspondence with them. They know that things shouldn’t have been file and you paid too much in. They are going to try and recalculate rather than have you file an amended return,” said Hagerty.
Hagerty says it’s also very important that you properly report the stimulus money you received so the IRS can make sure got the correct amount.
The stimulus money is also not taxable income.
When filing your taxes she recommends the direct deposit option because it’s always much faster. She adds you will receive your refund general 2 to 3 weeks earlier since you don’t have to wait for checks to be printed and mailed out.
The IRS extended the tax deadline to Monday, May 17, 2021, Arkansas followed suit making the state taxes due on the same day.