We’re just two months away from the April 18 deadline for filing your taxes, so you may as well get started now. A considerable number of changes will take effect in the tax year 2021.
Taxpayers should be aware of Economic Impact Payments, sometimes known as stimulus payments, according to Dan Rahill, Managing Director at Wintrust Management and a CPA. According to him, 175 million people got stimulus payments in March 2021, based on tax return data from 2019 and 2020. If you didn’t receive the entire amount of the tax credit, you may owe money, according to Rahill.
Many families may be eligible for extra Child Tax Credits and are unaware of it, according to Rahill. This is because the credit limit was raised in March as part of President Joe Biden’s American Rescue Plan. Qualifying families must claim the extra credit on their 2021 tax returns.
Individuals who do not itemize their deductions can now take a deduction of up to $300, while joint filers can take a deduction of up to $600. He further emphasizes that these deductions must be made in cash, according to WGNTV.
Can I claim Child Tax Credit payment despite being behind on student loans?
More than a hundred organizations signed a letter to US Treasury Secretary Janet Yellen this week, urging her to prevent the Treasury Department from seizing refunds tied to the earned income tax credit and Child Tax Credit from low-income families who have fallen behind on student loans or other debt repayments. According to the letter, the practice “undermines the social safety net and threatens to force millions of children into poverty.”
The collection of student loans has already been halted until May 1, raising fears that the tax refunds may be snatched once the hiatus expires. According to a statement on the Federal Student Aid website, the Education Department plans to suspend offset for six months after that, until Nov. 1, protecting the 2022 tax season refund.
Congress permitted payment of an enhanced Child Tax Credit on a monthly basis in the second half of 2021 to offer families instant access to tax assistance as a method of assisting them through the pandemic.
Congress also made such advance payments impenetrable to interception, a technique known as “offset” since it reduces the amount owing. However, persons who get a portion or all of the tax credit as a tax-time return are not protected from having the amount offset.
The Treasury Offset Program allows the federal government to collect tax refunds and partial Social Security payments to assist pay down late debts including federal student loans and owing child support. However, supporters argue that the funds should never be taken from tax credits intended to assist the poorest members of society, such as children, as per Deseret News via MSN.