There have been numerous changes to the tax laws in the past year and many people I visit with are wondering how it will affect them. In our last article, we talked about the new 2021 expanded child tax credit, which will affect millions of Americans. Since that article was released, the IRS has announced three new online tools to help families.
The first tool is the Child Tax Credit Eligibility Assistant. By answering some questions, families will be able to determine if they are eligible for this new tax credit. You will need a copy of your 2020 filed tax return or your 2019 return if you haven’t yet filed for 2020 to access this tool. If you don’t have a copy of your 2020 return, you may be able to estimate the total income on your tax return. You will need to know your filing status, the number of qualifying children you claimed, income statements such as W-2s and 1099s and the amount of any expenses or adjustments that would change your taxable income.
The second is the Child Tax Credit Non-Filer Sign-up Tool helps families who are not required to file a 2020 tax return sign up for the child tax credit. Your main home must be in the U.S. for more than half of the year for you to use this tool. You can also use this tool if you did not receive the full amounts of the first and second Economic Impact Payments and you do not plan on filing a 2020 tax return to claim the missed payments. Do not use this tool if you:
- Filed or plan to file your 2020 tax return.
- Have had no change in dependents since filing your 2019 return.
- Are a resident of a U.S. territory.
- Do not have a main home in the U.S. for more than half of the year.
- Do not have a qualifying child who was born before 2021.
You will need the following information to use the Child Tax Credit Non-Filer Sign-Up Tool:
- Full name.
- Current mailing address.
- Email address.
- Date of birth.
- Valid Social Security numbers for you and your dependents.
- Bank account information.
- Identify Protection Personal Identification Number (IP PIN) if you have one from the IRS.
The third tool is the Child Tax Credit Update Portal. This tool helps families view their eligibility for the tax credit, view the amount of their advance payments, and unenroll from getting the advance payments. If you don’t already have an account set up with the IRS, you will need to have your photo identification available.
Though the new tax laws can be confusing, these tools should help you navigate the system if you qualify for the new child tax credit. Still have questions? Please reach out. I’d love to help you!Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.