A number of Forbes.com readers have some specific questions about Advance Child Tax Credit (CTC) payments, which are set to begin in mid-July. The IRS has some answers.
New Arrival?
Normally, the IRS would use a taxpayer’s 2020 or 2019 tax return to determine CTC eligibility, but what about a baby born in 2021? Readers A.D., K.K. and J.R. want to know. Each has a baby born earlier this year, while reader A.N. has an upcoming arrival with a due date in September (congratulations to all!). Will their newborns be eligible for advance CTC payments?
Good news: An IRS spokesperson said that one of the planned enhancements for the Child Tax Credit Update Portal, found on IRS.gov, will enable parents to add children who are born or adopted in 2021. Those who are in this situation should check the Advance Child Tax Credit Payments in 2021 web page to find out when the enhancement is up and running.
No Earned Income?
Reader K.C. asked if parents who are on SSI (Supplemental Security Income) and have no earned income are eligible for the CTC. She said the issue is confusing because “some places said yes and some places said no.”
According to the IRS spokesperson, the answer is yes: “The 2021 expansion of the Child Tax Credit, included in the American Rescue Plan enacted in March, included a number of new features that were not previously part of the CTC. One of them is making the credit available to families with no earned income (income from a W-2 job, independent contractor work or from running a business).”
That’s yet another reason why people who are not required to file tax returns should check out the Child Tax Credit Non-filer Sign-up Tool on IRS.gov to help them register for the CTC.
Out Of The Country?
A question came from north of the border, where reader D.S. asked if U.S. taxpayers who live in Canada and file U.S. tax returns are eligible for the advance CTC, adding that they were eligible for the CTC on their tax returns in past years.
The IRS spokesperson pointed out that according to the American Rescue Plan Act of 2021, you must have a main home in the U.S. for more than half of the year (2021) to be eligible for the advance CTC. There is an exception: members of the military, who are still considered to be living in the U.S. even if they are stationed abroad for an extended period of time.
Split Decision?
Reader B.L. said that he and his ex-spouse claim their son as a dependent in alternate years, with B.L. claiming his son for tax year 2020. He asked if he would be able to claim the advance CTC.
According to the IRS spokesperson: “The parent who claims or will claim the child in 2021 is the one who should get the CTC. The other parent should opt out or unenroll from advance payments.”
Taxpayers can unenroll from the CTC payments using the Child Tax Credit Update Portal tool. Also note that the IRS recently announced a new upgrade to the portal that allows families to update the direct deposit information for their bank account.
Making A Difference?
It’s clear that for many of the readers who contacted me, the CTC money will likely make an important difference in their current financial situations. If you expect to receive an advance CTC, be sure to monitor the Advance Child Tax Credit Payments in 2021 IRS page for the latest news.
Questions?
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