What You Need to Know About Dependents: Child Tax Credit
If you have a qualifying dependent that qualifies for child tax credit on your 2021 income tax return, you will need to reconcile any advanced child tax credit payments you received. Starting
in July of 2021 taxpayer with qualifying dependents were generally eligible to claim one-half of the dependents child tax credit in monthly installments. The monthly installments started in July
2021 and ended in December 2021. There was a bill proposed to extend that Advanced Child Tax Credit but at this time does not appear it will be passed however there are constant changes being
discussed that could affect taxpayer’s income tax returns in the future.
The Child Tax Credit has changed from 2020 to 2021.
|2020 Prior Year Tax Filing||
2021 Current Year Tax Filing
Children 5 & under
|$2000: Only 1400 refundable||$3600 refundable|
|Children 6 to 16||$2000: Only 1400 refundable||
|$500 (non-refundable)||$3000 refundable|
|Children 18 to 24*||$500 (non-refundable)||
**Children 19 – 24 must be full time college students
***Amounts above are up to amounts and subject to limitations and other rules.
What does Non-Refundable mean?
A non-refundable tax credit along with other eligible credits can only reduce Income Tax (which is separate from self-employment and other taxes) to $0 and then the non-refundable portion if any remains will have no impact on the return.
What does Refundable credit mean?
After income tax has been reduced to $0 a refundable credit offsets additional tax if due and refunds any excess credit if available as a refund to the client.
Better Guidance from Abacus CPAs
Abacus CPAs encourages all drivers to make a budget for themselves and to make saving your tax money in advance a top priority. This makes paying quarterly estimated taxes far less stressful and most importantly this will allow you to keep your focus on your business.
Abacus CPAs Can Help Make This Easy
Paying your quarterly estimates is now easier than ever! We offer online quarterly tax estimate payments with our NEW Growth service level option. That’s right; we’ll make your payments for you! You can also pay your federal quarterly estimates online at www.irs.gov/payments. If you are interested in signing up for our new service option, which includes online quarterly tax estimate payments, contact our team at 417.380.5000 OR email@example.com.
At Abacus™ CPAs, our focus is you! Contact us today if you need help or more information on this valuable topic.
We believe that our employees and clients deserve to interact in an environment that fosters growth, trust, and confidence. Abacus™ professionals provide leadership by relentlessly pursuing the best guidance possible so those we serve can make smarter decisions.
We are here to serve you and your business. Contact us today by calling 417-380-5000, or visiting our website at www.abacustrucking.com