Child Tax Credit: A Complete Video Guide for 2021 (Step-by-Step) - YouTube

so we've got some great news for all the  parents out there so the new federal enhanced  

child tax credit will officially start on  july 15 2021 and this child tax credit will  

go out to close to 40 million households or  roughly 90 of children in the united states  

according to the irs so in this video i want to  eliminate all the confusion around the child tax  

credit and break down exactly who qualifies  for it how to make sure you actually get  

your payments and how these payments may affect  your taxes in 2021 and a whole lot more so stay

tuned

all right so what exactly is this new monthly  child tax credit all about well as a part of  

the american rescue plan that was signed  back into law back in march households  

will now get enhanced child tax credits up  to thirty six hundred dollars for children  

younger than the age of six and three  thousand dollars for those between the ages  

of six and seventeen now instead of sending out  these payments all at once they have decided to  

do monthly installments of this tax credit so 300  a month for the people who qualify for the 3 600  

credit and 250 a month for those people  who qualify for the 3 000 child tax credit  

now these are tax credits let me repeat okay these  are tax credits all right so this is not like a  

stimulus check or even enhance unemployment  benefits you can think of this as more like  

an advance on your 2021 tax return which could  have some ramifications when you file your taxes  

in 2022 which we'll explore a little bit later  on in this video now the credit is per child  

in each household so for example if you have kids  who are let's say two years old four years old and  

eight years old then you will get up to eight  hundred and fifty dollars a month in advanced  

child tax credits which is 600 a month  for the two kids under the age of six  

and two hundred and fifty dollars for the kid that  is between six and seventeen so a very very good  

tax credit and the first payment goes out on july  15 2021 now who qualifies for the maximum credit  

well most people will qualify for the credit  so if you are single then you can get the full  

credit as long as you make 75 000 or less and if  you're married you also get the full amount of the  

credit as long as you make 150 000 or less now the  full tax credit will basically start to phase out  

for individuals who make more than 95 000 or when  married couples filing jointly earn more than 170  

000 now if for some reason you don't qualify  then don't worry too much because you still  

are eligible for the normal child tax credit which  is two thousand dollars per child under the age  

of 17. okay so as long as you make less than two  hundred thousand dollars as an individual or four  

hundred thousand dollars as a married couple  filing jointly then you still get that normal  

child tax credit but that tax credit will likely  be given to you when you file your tax return  

in 2022 all right next let's talk about how you  can actually get your tax payments but before i do  

if you're new to the channel welcome i'm sean with  life accounting the accounting company that saves  

people from high taxes and low profits if you  find any value from this video in this news update  

would you please do us a huge favor by liking this  video and when you do it helps with the youtube  

algorithm and it just makes us really happy  okay so how do you get your new monthly child  

tax credit payments let's talk about what you need  to actually do okay so as of right now your best  

bet is to make sure that you have filed your  tax return now i understand some returns still  

haven't even been processed yet okay but as  long as you have filed your 2020 tax returns  

then you don't have to do anything else right  now at least according to the irs now if you  

haven't filled out your 2020 taxes yet then  i definitely recommend that you do but if  

you still can't for whatever reason then the irs  will use your 2019 taxes but i would assume that  

will put you at the back of the line as far  as receiving those monthly child tax credits  

another super cool update at least to me is that  the irs is working on a portal so that people  

who haven't filed can submit their information  and still receive their tax credits in 2021.  

the portal should help taxpayers be able to submit  changes going forward as well as help parents with  

claiming a specific child so there's no confusion  as to who is claiming a child and who should  

receive the child tax credits all right next up  how will the payments be sent well just like the  

stimulus checks that were sent out last year and  a little bit earlier this year the irs plans to  

send the monthly child tax credit payments by  direct deposit okay according to the irs this  

is the way roughly eighty percent of taxpayers  will receive their money for these tax credits  

so if you receive your tax refund or you pay your  tax liabilities with your bank account information  

then this is likely what they will use to send the  monthly payments to which means that it is super  

important to make sure that whatever bank account  information you use to file your taxes last year  

was not only the correct information but the  account stays active as long as you want to  

receive these monthly child tax credit payments  now of course if you don't have direct deposit set  

up then the irs will likely mail you a check so  again you want to make sure that your address is  

up to date so that your money gets sent to the  right place of course you can log into your irs  

account to check that your address is up to  date as well as other permanent information  

all right now when will the payments be  sent so the first payment as we mentioned  

will start on july 15 2021 and then after that  you should expect to receive your next payment  

on the 15th of every single month unless of  course if the 15 falls on a weekend or a holiday  

then you can expect to have your money to be  sent on the closest business day now as far  

as when the payments will end as of right now  the monthly payments are scheduled to continue  

through the end of 2021 but of course things are  rapidly changing they're talking about even more  

proposals all over the country and the president  actually recommended that the enhanced credits  

stay until 2025 right unbelievable and there are  even more aggressive opinions where some people  

want to see the tax credits extended indefinitely  right they want those monthly payments to go out  

basically forever alright so here's  a question that may be on your mind  

can you opt out of the monthly child tax credits  and how does that affect your tax planning now  

as i touched on earlier we can't forget that  these are tax credits and on top of that most  

people have been used to and almost conditioned  to receive their tax credits along with their tax  

refund which gives them this big juicy refund to  look forward to but this time around you will be  

getting these payments throughout the year so your  tax refund likely will be significantly reduced if  

you're someone who's used to receiving these tax  credits and some people like the idea of getting a  

huge tax refund hey sean look it's raining money  because you can make a large purchase without  

having to budget or think about it very much right  so for example if you need to repair something at  

your house or repair something on your car you  can trust that at the end of the year when you  

file your taxes you're going to get a huge tax  refund and a lump sum of money to be able to  

make those repairs or maybe you just want to buy  a new stove or a new refrigerator again instead of  

you having to budget and put money aside you  can just plan to use your tax refund on that  

so if that's you yes you can opt out of receiving  these monthly payments through the irs portal and  

yes you still will receive your full tax credit as  long as you're eligible when you file your taxes  

in 2022 so at the end of the day you want to think  about what is your overall tax plan for yourself  

and your family and that will dig into a little  bit about how you plan to budget for your monthly  

and your yearly expenses alright so of course  if you want to learn more about tax planning  

especially if you're in business that's  what we do here that's what we're all about  

so please make sure you subscribe to our  channel because we'll definitely have  

more videos about how to do tax planning for  yourself and your business all right so that's  

all i have for today please keep a locked here and  check out some of these other videos coming up now