Connect with us

Fresh World News

When can you expect your October child tax credit payment?

When can you expect your October child tax credit payment?

DIGITAL MARKETING NEWS

When can you expect your October child tax credit payment?

Why child care is expensive and hard to reformHere’s why the U.S. child care system is so expensive and why it’s difficult to change.Just the FAQs, USA TODAYAs we fall deep into the season of dancing skeletons and haunted hayrides, yes, it’s time once again to think about taxes. Sure, dressing up as a CPA isn’t exactly a hot Halloween costume, though an industry group once smartly suggested dressing up as a golfer wearing the name tag “Par Value,” and gave another another costume tip for “General Ledger.” Most of us really aren’t thinking tax returns in mid-October. But Oct. 15 is a date to watch for a few reasons.First, families can expect some treats since the fourth round of advance monthly payments for the child tax credit are scheduled to arrive Oct. 15.► Is the stock market primed for an October swoon?  Why investors shouldn’t fear the frightful month► The Daily Money:  Get our latest personal finance stories in your inboxWatch to see if you’ve received the correct direct deposit or a check in the mail if you have children who are 17 or younger. But don’t bank on everything going smoothly for Oct. 15 because we’ve heard of more than a few bumps in the night with this roll out. Now the tricky part: Did you file your 2020 tax return by this year’s deadline of May 17, which was extended a bit to deal with a long list of tax changes and issues?Or did you need even more time to pull it all together?Some taxpayers could wrongly view this as a six-month extension from May 17, but the extension is six months from the traditional deadline. “It’s April 15 plus six, or Oct. 15,” said Mark Steber, chief tax information officer for Jackson Hewitt Tax Service.Will you need to file a tax return by Oct. 15? If you’re one of the thousands of Americans who requested an extension to file their 2020 federal income taxes, returns must be filed by Oct. 15 to avoid a penalty for late filing. Free File remains available through Oct. 15.Take into account that if you were a victim of a tornado or other severe weather, you may be eligible for some relief.In Michigan, for example, those facing setbacks due to severe storms, tornadoes and flooding can wait until Nov. 1 if they had requested a valid extension to file their 2020 federal income tax returns. The IRS automatically identifies taxpayers in a covered disaster area and applies filing and payment relief. But affected taxpayers who reside or have a business outside the covered disaster area would need to call the IRS disaster hotline at 866-562-5227 to request relief.More: Economic drags remain but the U.S. will avoid a recession in 2022. Here’s howIRS spokesperson Luis D. Garcia noted that others will also have more time, including certain members of the military and taxpayers in other states hit by natural disasters. Victims of Hurricane Ida in parts of New York and New Jersey, for example, now have until Jan. 3 to file various individual and business tax returns and to make tax payments. The IRS notes that those who still have not filed a 2020 tax return, owe tax, and did not request an extension can generally avoid additional penalties and interest by filing the return as soon as possible and paying any taxes owed.Will more money for the child tax credit arrive Oct. 15? The ongoing advance monthly payments for the child tax credit are also scheduled to arrive Oct. 15. Again, you want to wait until you see the actual direct deposit or the check in the mail, as payments in August and September were marked by scattered mishaps.I’ve heard from many families who waited more than a week and then received less money than they anticipated for the September payment. Some 2% or less – or roughly 700,000 – of those receiving the advance credit did not get their money on time as of Sept. 15, according to the IRS. Most families are automatically receiving monthly payments of $300 for each young child through age 5 or they’re receiving $250 each for an older child without having to take any action.Under the American Rescue Plan, the maximum child tax credit rose to $3,000 from $2,000 per child for children ages 6 and older, and it rose to $3,600 from $2,000 for children ages 5 and younger. The age limit went up to 17 from 16 to cover more teens, for a maximum $3,000. Families pay for rent, food with child tax creditFamilies are starting to spend money from the expanded child tax credit. That includes Brianne Walker, who is raising five children on her own, including two siblings in her custody. She used her first check to make a late rent payment. (July 29)APWhat else is tied to Oct. 15? The revamped child tax credit now includes help for families who typically don’t make enough money to be required to file a tax return. But to get the money, they need to file a federal income tax return or go through a non-filer tool at IRS.gov. If you’re going to try to use the tool online, the IRS said its “Child Tax Credit Non-filer Sign-up Tool” will be available only until Oct. 15 at IRS.gov. The nonfiler tool is for those who need to report qualifying children born before 2021. The nonfiler also must have a main home in the United States for more than half of the year.You would not use the nonfiler tool if you filed or plan to file a 2020 federal income tax return. The IRS lists other reasons not to use the tool  as well, including if you “do not have a qualifying child who was born before 2021 and had a Social Security number issued before May 17, 2021.” Key deadlines to stop advance child credit paymentsWhile many people like to receive extra money now, there are many reasons to avoid getting that money, too. Say if you’re worried about owing taxes or getting a much smaller income tax refund when you file your tax return for this year in 2022. Steber, of Jackson Hewitt, said the advance payments this year only amount to up to half of the potential credit. And he noted the IRS has done a good job of matching up appropriate advance payments based on 2019 or 2020 tax returns.”That works well when facts line up with reality,” Steber said. ► Haven’t received your child tax credit check?  Are you sure you want it?Yet if families know their situation has changed where they wouldn’t really qualify for the credit, he said, their best bet is to stop the advance payments even at this late date. Putting things off – sort of like telling yourself that you’ll get gas on Monday morning – has a way of not exactly working out the way you’d imagine, he warned. So far, the tax industry estimates that more than 1 million people have opted out of these advance payments, Steber said, but the numbers aren’t exact because the IRS has not released such data. Opting out does take some effort, including verifying your identification and setting up an ID.me account. And the IRS has continued to work on the new tool. “I wouldn’t say it’s like pressing a button on your smart phone and you’re opting out,” Steber said. You can stop the November payment if you meet the IRS’s Nov. 1 deadline for opting out. If you miss that, you can opt out of the December payment as long as you meet a Nov. 29 deadline. If you’re trying to opt out of payments for November and December, you won’t need to opt out twice. If you act by Nov. 1, the IRS says you’d stop those payments for each of the two months. Some who are married may want to opt out if they’re concerned that they might owe too much in taxes. But here’s a key tip: If you’re married and filing a joint return, both spouses need to opt out.The IRS notes that if your spouse unenrolls but you do not, you still will get half of the joint advance payment you were supposed to receive with your spouse.No monthly advance payments are currently in place for 2022 because so far this deal is temporary. House Democrats, though, want to extend the program until 2025. In addition, they want to make permanent a change that makes the credit available to low- to no-income families.Why should you stop payments – even now? The monthly advance payments in 2021 could create a massive headache for some, including those divorced couples who share custody of their children and alternate years for claiming their children on tax returns.It gets really complicated quickly. The IRS is sending the advance payments now to the parent who claimed the child on their 2020 tax return — and that’s true even if that parent has no plans to claim the children on the 2021 return. The problem could hit if someone else is qualified to get the child tax credit for 2021 and then will be claiming the credit on the 2021 return when it’s filed next year. If parents alternate years claiming their child on their tax return, the IRS said it will send the 2021 advance child tax credit payments to the parent who claimed the child on their 2020 tax return even though they will not claim them on their 2021 tax return.And someone who gets the money now could have trouble when filing a 2021 tax return next spring. “When they file their 2021 tax return, they may have to pay back the payments over the amount of the credit they’re entitled to claim,” the IRS noted in an October alert.”Some taxpayers may be excused from repaying some or all of the excess amount if they qualify for repayment protection. If a taxpayer won’t be claiming the child tax credit on their 2021 return, they should unenroll from receiving monthly payments using the Child Tax Credit Update Portal,” the IRS said. Steber noted that the window for forgiveness is very small.There are “safe harbor” amounts where you’re not required to repay up to $2,000 per qualifying child.That’s the case if you are single and your income is below $40,000. For the head of household, the income needs to be below $50,000. And for married couples filing jointly, the income would need to be below $60,000. A partial safe harbor exists for filers with income between: $40,000 and $80,000 if single; $50,000 and $100,000 for head of household; and $60,000 and $120,000 for married filing a joint return. If your income exceeds these thresholds, you will be responsible for repaying the full amount of any over-payment on your tax return. Steber said those safe harbors were put in place to reflect that the IRS was rolling out the new advance payment program in a short time frame and working with the information that was readily available at that time. The taxpayer who does claim the children on the 2021 return is the one who is qualified to receive the full amount of the child tax credit — even if the ex-spouse received the monthly advance payments. George W. Smith, a CPA with Andrews Hooper Pavlik in Southfield, said he expects a great deal of confusion and sticker shock for some divorced taxpayers with children.”The shared custodial issue is definitely going to create problems,” Smith said. Smith said he fears that many people won’t have the money to pay it back if they are required to do so next April. “That is why I would advise them to stop and take a wait and see approach,” Smith said. Contact Susan Tompor via stompor@freepress.com. Follow her on Twitter @tompor. To subscribe, please go to freep.com/specialoffer. Read more on business and sign up for our business newsletter.


Source link

Continue Reading
You may also like...
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

More in DIGITAL MARKETING NEWS

To Top
error: Content is protected !!