(Above, Inset: l-r): IRS experts – Ken Corbin, Commissioner, Wage and Investment Division, Chief Taxpayer Experience Officer; and Susan Simon, Director, Customer Assistance, Relationships and Education. (Siliconeer/EMS)

 

At an Ethnic Media Services briefing, Oct. 15, IRS experts – Ken Corbin, Commissioner, Wage and Investment Division, Chief Taxpayer Experience Officer; and Susan Simon, Director, Customer Assistance, Relationships and Education – provided an update on the Advance Child Tax Credit Payments, including who qualifies, payment dates for the remainder of the year, and online tools to help taxpayers signup for and manage their payments. They also provided information for the upcoming filing season.

The Internal Revenue Service interest in speaking with ethnic media is an important recognition by a federal agency of the sector’s role in communicating with the country’s diverse immigrant populations and communities of color.

It’s just a few months to the beginning of the next filing season. April 15 is tax-day. “We’ve delivered billions of dollars in advanced child tax credit payments to families across the country. The American Rescue Plan Act of 2021 enhance the child tax credit. One of the country’s most used tax credits, in previous years the child tax credit was worth up to $2,000 per qualifying child under the age of 17. For 2021, it is up to $3,000 for each qualifying child age 6 through 17. For 2021, the new law enhanced the credit by making it fully refundable for certain taxpayers.

“This means that taxpayers can benefit from the credit even if they don’t have earned income or don’t owe any income taxes.

“These advanced payments of the child tax credit are expected to help more than 39 million households,” said Commissioner Corbin.

He pointed out some very good tools that are available at irs.gov.

The Eligibility Assistance tool, where taxpayers can check their eligibility for the advanced child tax credit payments, is particularly useful to taxpayers who are not required to file a federal tax return and have not yet filed either a tax year 2019, or tax year 2020 return.

The second tool is the Non-filer Sign-up tool. It is used to report qualifying children born before 2021, recommended if a taxpayer isn’t required to file a 2020 tax return or didn’t file one and doesn’t plan to. The tool is also recommended if the taxpayer has gross income in 2020 of less than the applicable standard deduction amount and has a main home in the United States for more than half the year. Taxpayers who did not get the full amount of the first two rounds of the Economic Impact Payments stimulus money in 2020 can also use this tool.

The third tool is the Child Tax Credit Update portal. It allows families to make various updates:

  • It lets families unenroll or opt out of the advanced payments if they are already receiving advanced child tax credit payments. Taxpayers may prefer to claim the full credit when filing their 2021 tax returns, next year in 2022, or taxpayers may already know that they won’t be eligible for the child tax credit for the 2021 tax years.
  • Allows users to update information for the advanced child tax credit payments. Families can use this update portal to verify their eligibility for payments; switch from a paper check to direct deposit; change the account where their payments are directed to; and update their address.
  • New features on this portal coming soon, will allow taxpayers to add or remove children; in most situations, report a change in their marital status; or report a significant change in income.

The advanced child tax credit payments are made in equal monthly installments from July through December of 2021. An eligible taxpayer may receive one half of the estimated 2021 Child Tax Credit as an advance payment. Eligible taxpayers who have a main home in the U.S. for more than half the year qualify for the advance credit, even if they do not have earned income.

An advanced payment is not taxable for federal income tax purposes and is not counted as income when determining eligibility for, or amounts of benefits, or assistance, under any federal program, or under any state or local program, financed in whole, or in part with federal funds.

These payments can’t be offset for overdue taxes from previous years, other federal or state debts, or past due child support payments, once IRS has issued the advanced child tax credit payments. Some of these payments are not exempt from garnishment by non-federal creditors under federal law.

Some states and financial institutions have chosen to protect these payments.

Taxpayers can reconcile their advanced child tax credit payments with the child tax credit they claim on their 2021 tax returns, in the 2022 filing season.

“Basically, you can reconcile your advance payments and get the other half of your advanced child tax credit payment next filing season in 2022,” said Commissioner Corbin.

“The IRS will send letters in January of 2022 to taxpayers showing the amount of the advanced child tax credit and the economic impact payments they receive this year. It is very important that families hold on to these letters as they will be needed to accurately fill out their 2021 federal income tax. It will match IRS records,” pointed Commissioner Corbin, stressing that people should open any mail from the IRS as they get it.

“It’s so important that you open that letter and have that information available in January when you get ready to file your 2021 tax return. This is important for most families because the advance payments they are receiving during 2021 cover only half of the total credit you’re entitled to. Remember, you will have to file a tax year 2021 return to get the other half of the child tax credits,” said Commissioner Corbin.

EITC

Other tax benefits impacted by the American Rescue Plan Act is the Earned Income Tax Credit. For 2021 only, more childless workers can qualify for the earned income tax credit. The maximum credit is nearly tripled for these taxpayers. For those with no dependents, it’s up to $1,502, up from $538 in 2020. It can be claimed by eligible workers who are at least 19 years of age. Full-time students under the age of 24 don’t qualify.

For 2021, taxpayers can also choose to figure the EITC using their 2019 income, as long as it was higher than their 2021 income. In some instances, this option will give the taxpayer a larger credit.

Some other changes that apply to 2021 and future years:

  • Singles and couples who have social security numbers can claim the credit even if their children don’t have social security numbers. In this instance, they would get the smaller credit available to childless workers. In the past, these filers did not qualify for the credit.
  • More workers and working families who also have investment income can get the credit. Starting in 2021, the limit on investment income is increased to $10,000. After 2021, the $10,000 limit is indexed for inflation. The current limit is $3,650.
  • Married but separate spouses can choose to be treated as not married for EITC purposes in certain circumstances.

Answering a question, Commissioner Corbin said, “To be eligible for the advanced child tax credit, one of the parents or guardians must have a social security number for the children or the other parent. They should have what we call an Individual Taxpayer Identification Number or I-TIN. The best way to determine if a family or their children are eligible is to use the eligibility assistant on irs.gov.”

Director Susan Simon talked a little about fraud prevention.

“These credits are a great deal of money. In many households this is more money than they see in one lump sum throughout the year, so it’s very important that they ensure that someone else does not get that money. There are fraudsters out there and they are constantly preying on people who are receiving new money.

“We have worked very hard with representatives from banks, from other state and federal organizations, and set up a security summit where we look at ways that we can stop identity theft and ensure that the taxpayer gets the money that they have applied for, and they are eligible for,” said Simon.

“We try to help taxpayers gather together the information that they need to do their tax return completely, in one sitting, hopefully, so they don’t have to start it, go back and get something started again.

“Our ‘Get Ready’ web page is available in eight languages. It is a great place for taxpayers to find the information they are going to need to file their tax returns. Some of the things they do need to do – gathering their tax records; any bank statements; statements from the IRS; we are sending out letters in December to tell people how much their economic impact payment was, and how much they may have received in advance child tax credits – they need to have that information when they file their tax return,” said Simon.

“If they (taxpayers) can, they should be checking the ‘Tax Withholding Estimator’ on irs.gov. When you do your tax return, if you find that you are not receiving the refund you thought you would, or something has happened in your family over the year that makes your tax return different – maybe a child is added or a child ages out of a benefit – you may want to go in and change things in your W4 so that your employer is taking out the right amount of withholding,” advised Simon.

“This year, there is a Form 9000 that can be attached to the tax return. It is the alternative media preference form. It allows taxpayers to select preferred alternative media, so if they want to receive information from us in braille or in large print, to make it easier, or in audio format, they should submit this form with their tax return,” said Simon.

A very important one way to reduce fraud and help taxpayers receive their refunds, fast, easily, safely, is to encourage people to set up a bank account, and have their refunds direct deposited. “It is a much quicker way to receive the refund, no checks can be stolen out of mailboxes or misdirected, so that is one thing we strongly, very strongly encourage taxpayers to do,” said Simon.

It is important to ensure that the individual tax identification number (I-TIN) is correct. “People who do not have a social security number and who have already received an I-TIN need to ensure that it has not expired. For tax years 2018, 2019, and 2020, if they did not file a return in any of those years, their I-TIN will expire, and they will need to get them renewed,” said Simon.

“Renew your I-TIN now, do not wait until you file your tax return, that will slow up your refund,” said Simon.

There are many ways for taxpayers to get help:

They can go to a local paid preparer in their community that provides them the safety of knowing that that is someone who is in their community, that they have worked with before.

There’s IRS Free File Online at irs.gov. It allows taxpayers to sit at home, select a tax return preparer through irs.gov, file their tax return with the assistance of that online preparer, and send it in electronically. If they have direct deposit, that makes the whole process quicker, easier, and safer, for taxpayers.

Another option is IRS VITA Program (Volunteers in Taxpayer Assistance). VITA sites are set up around the country where volunteers will prepare tax returns. Because of Covid, many of the sites had to continue preparing tax returns online. This year, many of them are trying to open face-to-face sites. VITA sites can be found on irs.gov.

“We also prepare people to be VITA volunteers,” said Simon.

The IRS increased their services to multilingual taxpayers. Starting this year, all VITA sites will provide translation services in 350 languages through over the phone interpreters.

Taxpayers can read the instructions and complete the form in their native language. The IRS is translating other documents into five different languages as well over the next five years. These include English Spanish Russian, Traditional Chinese, and Formal Chinese, Vietnamese, and Korean.

The IRS is hiring. Anyone who is interested in joining IRS, can go to usajobs.gov and apply.

The IRS is here to help.