MECHANICSBURG, Pa. — The AgChoice Farm Credit accounting team shares an important update for taxpayers with children. The American Rescue Plan Act of 2021 makes several temporary changes to the Child Tax Credit that will affect many taxpayers with children who will be 17 years old or younger at the end of 2021. The act increases the credit to $3,600 for children under the age of six and $3,000 for children ages six to 17. Unless they opt out, taxpayers will receive up to half of this credit in advance.
The Internal Revenue Service (IRS) will send eligible taxpayers half of this credit money throughout the remainder of 2021 (with the other half claimed on the 2021 tax return). In mid-July, taxpayers will begin receiving these payments. Payments will equal one-twelfth of the total credit that a taxpayer can expect to receive. For married taxpayers with an income of $150,000 or more, the credit amount is reduced.
For example, a family with two children, ages eight and ten, will be eligible for $6,000 of Child Tax Credit. The family will receive six payments of $500 each starting in mid-July and running through December 2021. They will receive an additional $3,000 credit when they file their 2021 tax return.
If taxpayers wish to receive these advanced payments, no action is needed. However, should a taxpayer wish to opt out of the advanced payments and claim the full credit on their 2021 tax return, they will need to notify the IRS. Taxpayers can do this through an online portal or paper form with the IRS. Both the portal and form are in development. Taxpayers should monitor the IRS website and other news outlets (or check with their tax professional) for the opening of the portal and release of a final form.
AgChoice Farm Credit specializes in providing farm and country property loans and financial services to help customers confidently reach their dreams in 52 Pennsylvania counties and four West Virginia counties. Learn more at agchoice.com or 1-800-998-5557.
–AgChoice Farm Credit