Delving into the Declaration of Independence on July 4, 2021
Tax breaks that can help minimum wage workers

3 Advance Child Tax Credit moves (& more!) to make in July

Child_flag_fireworks_noise
Your youngster might not have enjoyed the Fourth of July fireworks (I'm right there with you, kiddo, when it come to the noise!), but your son or daughter could make you eligible for Advance Child Tax Credit payments starting this month.

Hello, July! Yeah, I know my welcome to the first full month of summer is a bit late. But admit it. You don't really focus on the month either until after July 4th.

Since it's the midpoint of the tax year, July usually is a great time to look into some tax saving tasks (more on this a bit later).

But of particular note this summer, thanks to COVID-19 pandemic prompted tax code changes, are some Advance Child Tax Credit (AdvCTC) moves.

Child Tax Credit considerations: On July 15, the Internal Revenue Service begins distributing payments of up to $300 per child age 5 or younger, $250 for youngsters ages 6 to 17, to eligible families.

The AdvCTC payments are, as the name indicates, early partial payments of the Child Tax Credit. The aim is to get some of the money into people hands so they can spend the cash now instead of waiting to claim the full credit as a lump sum when they file their 2021 taxes next year.

The advance payments will be half of the 2021 tax year total credit amount, which under the American Rescue Plan Act enacted in March, was bumped up to $3,600 for each child younger than 6 and $3,000 for each older youth.

Most qualifying families don't have to do anything but wait for this money to arrive.

Others, however, might want to make some AdvCTC moves this month, especially if you haven't had to file a recent tax return, want to change how you get the money or, in some cases, decide you don't want the money in advance after all.

These three AdvCTC top the July Tax Moves you need to make. Here goes!

1. Register for the AdvCTC. The IRS is sending most of these early payments automatically to taxpayers who filed a 2020 or 2019 tax return.

But some folks who qualify for the credit didn't have to file a tax return for either of those years. Since these nonfilers aren't in the IRS system, they won't get the payments.

However, they can get on the IRS AdvCTC distribution list by using the agency's online Non-filer Sign-up Tool. By entering your information at the secure site, the IRS will automatically determine your eligibility and issue you the advance payments.

If you prefer to submit your data by filing a 2020 tax return, that's OK with the IRS, too. In fact. This coming weekend, the agency is working with community groups in 12 major metro areas to provide in-person help for AdvCTC eligible taxpayers who want to submit tax return.

You can get the help on either July 9 or July 10 if you live in Brooklyn, N.Y.; Houston, Texas; Miami, Florida; Philadelphia, Pennsylvania; Phoenix, Arizona; St. Louis, Missouri; or Washington, D.C./Maryland suburbs. The help is available only on July 10 for residents living in or around Atlanta, Georgia; Detroit, Michigan; Las Vegas, Nevada; Los Angeles, California; and Milwaukee, Wisconsin. You can find more details in my earlier post on the upcoming IRS-sponsored tax return filing events.

2. Change your payment delivery information or method. If on your most recent Form 1040 in the IRS system has direct deposit bank account info, that's how the IRS will send your AdvCTC amounts. If, however, you've closed that account and/or replaced it with another, you need to let the IRS know. As soon as possible.

You can change your direct deposit info by using the IRS' online Child Tax Credit Update Portal. There you can confirm your eligibility, see whether the IRS plans to send it to you via direct deposit and double check the bank info the agency has on file. If you need to change the deposit data, you'll be able to do that, too.

Note, however, that the bank information change won't take effect until the August (and subsequent) AdvCTC deliveries. In the meantime, any credit amount sent to a now-closed account will bounce back to IRS, which will reissue it as a paper U.S. Treasury check and send it via the U.S. Postal Service to the mailing address in your tax file.

And speaking of snail mailed tax checks, if that's how you got your refund from the last return on file with the IRS, but you now have a bank account, you can notify the IRS of that so your AdvCTC will be directly deposited.

3. Opt out of AdvCTC amounts. In some cases, some people may decide they'd rather claim the full Child Tax Credit amount when they file their 2021 returns next year. One reason to refuse the early payments could be because your child listed on earlier tax returns that the IRS has on file now, in 2021, is too old to qualify. In this case (and others discussed in my post on when advance Child Tax Credit amounts might have to be repaid), you'll want to stop the early distributions.

The good news if you're in this situation is that you can say no thanks to the advance payments by, once again, using the Child Tax Credit Update Portal. It has an unenroll feature.

The bad news is that if you're already on the IRS' automatic delivery list, you're going to get the July 15 advance payment. That process is underway and cannot be stopped. You can, however, stop the August-through-December payments letting the IRS know via the online tool by Aug. 2.

And if you decide, even after getting a few of the early Child Tax Credit payments, that you want to stop them, you can. Just make sure you meet the unenrollment deadline listed below:

Payment
Month

Unenrollment
Deadline

Payment
Date

August

8/2/2021

8/13/2021

September

8/30/2021

9/15/2021

October

10/4/2021

10/15/2021

November

11/1/2021

11/15/2021

December

11/29/2021

12/15/2021

The IRS has more about the AdvCTC unenrollment process at a special questions and answers page.

More July tax moves: OK, you've taken care of your AdvCTC deliveries. Or this tax break doesn't apply to you. Either way, you want to make some more July Tax Moves. (Hey, it happens!) The ol' blog has you covered.

You'll find them in their usual place, over in the right column under the July Tax Moves header, which is just below the clock counting down to the October 2020 filing extension deadline.

July tax to-do's range from mundane tasks like checking your payroll withholding to getting ready for hurricanes (and other disasters) to planning for sales tax holiday shopping.

Give them a look. If any of the moves in this post or over there apply to your personal tax situation, take advantage of them. The tax savings they could just might help pay for the summer vacation you've got planned now that you're vaccinated and coronavirus restrictions have been eased.

 

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