TMCnet News
AICPA Addresses Taxpayers' Top Questions About the Child Tax CreditThe American Rescue Plan Act included changes to the child tax credit that were designed to benefit certain taxpayers; however, some of these changes are now causing confusion and anxiety for many. The American Institute of CPAs (AICPA) recognizes the stress many taxpayers and tax professionals are experiencing and is providing useful information and tips to help ease the burden, reduce the complexity and clarify details. What Are the Big Changes Taxpayers Need to Be Aware (News - Alert) Of? Among the many changes to the child tax credit, AICPA recommends that taxpayers be aware of the following:
How Might the Tax Credit Impact 2021 Tax Returns? Taxpayers should also understand that these changes are temporary and only apply to the 2021 tax year, and the decision to have the child tax credit payments received in advance will affect a taxpayer's refund or amount due when that return is filed. This means for those who choose to receive advance monthly payments now, they will either receive a lower refund next year or potentially owe tax (and maybe interest and penalties) that they wouldn't ordinarily owe. To avoid any surprises, it's important for taxpayers to contact a CPA to discuss their situation and make any necessary plans. Should Taxpayers Opt Out of Receiving the Tax Credit? Many taxpayers remain confused about whether they should opt out of receiving advance monthly payments. Here are some of the instances where taxpayers may want to opt out:
What Resources Are Available? AICPA's 360 Degrees of Financial Literacy program provides Americans with free resources to help them better understand their finances and make more informed money decisions. The website features articles, videos and financial calculators as well as information about working with a CPA, filing taxes and the importance of year-round financial planning. Taxpayers can update their information to reflect any new information that might impact their child tax credit amount, such as filing status or number of children, using the IRS's child tax credit and update portal. Parents may also use the online portal to elect out of the advance payments or check on the status of payments. Note that certain functions of the IRS online portal are not currently available but are coming soon. The IRS also has a non-filer portal to use for certain situations. Non-filers are those individuals who do not need to file a tax return but would have received a stimulus payment, such as individuals out of work, receiving Social Security or who are homeless. About the American Institute of CPAs The American Institute of CPAs® (AICPA®) is the world's largest member association representing the CPA profession, with more than 428,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives continuing education to advance the vitality, relevance and quality of the profession.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210722005696/en/ |