Hi there! Are you surviving this record-breaking heat?! Make sure to stay hydrated! We have some exciting news to share with you-The Piper Team is growing! Please help me welcome Allyssa and Kim to our team! We will be introducing them and sharing with you what they will be doing for Piper in our latest social media posts. Please check out our Instagram and Facebook pages and say hello!
We’ve been getting a lot of calls and emails about the IRS processing times (they are really behind!), and clients asking about The American Rescue Plan Act (ARPA) and how the Child Tax Credit Advance works, so this update is to get you up to speed!
The American Rescue Plan Act (ARPA) was passed in March of 2021. ARPA is why you received a third stimulus payment of $1400 for every member of your household. The plan changed some tax credits and includes the advance child tax credit payments that will start paying out in July…
The child tax credit is a refundable tax credit of up to $3600 per qualifying child under 18. The credit goes from $2000 per child to $3000 per child for children over the age of six, $3600 for children under the age of 6. Starting Mid-July, those who qualify will receive six monthly payments from the US Treasury via direct deposit equal to 50% of the eligible credit. The other 50% can be claimed on your taxes later. Your most recent tax return will be used by the IRS to determine whether you qualify for the child tax credit. This will be reconciled on your 2021 tax return that is filed in 2022. This is NOT a stimulus payment. Please keep in mind, if you do not qualify for the credit, ie. your child turned 18 in 2021, you will have to pay back this credit. You can opt out of receiving the advance payments through the link below.
To assist with these Child Tax Credit payments the IRS has announced two new online portals to help you manage them. You can opt out of the advance through signing up through the following link.
For those who are not required to file a tax return but want to sign up for these advance payments, you can do that through the following link.
The Child and Dependent Care Tax Credit is another credit that will be refundable, but only for the 2021 tax year. This credit can get you up to 50% of up to $8,000 of childcare and similar costs for children under 13, a spouse or parent who cannot care for themselves, or another dependent so that you can work. This is up to $16,000 of expenses for two or more dependents. The percentage of allowable expenses decreases for higher-income earners at which point the value of the credit also decreases. This credit will not be paid in advance.
ARPA also increased the Earned Income Tax Credit for those without children. The credit goes from $543 to $1502. This credit will be received on your 2021 tax return that is filed in 2022.
ARPA extended unemployment benefits until September 6th, with a weekly supplemental benefit of $300 on top of the regular benefit of $400. The first $10,200 of unemployment benefits will be tax-free for people with incomes less than $150,000.
ARPA will also lower health insurance premiums and provide 100% federal COBRA subsidy. It will lower or eliminate premiums for families enrolled in the health insurance marketplace. A family of four making $90,000 could see a savings of $200 per month on their health insurance premium!
I have received several calls and emails regarding refunds that haven’t been received and checks that haven’t been cashed. The IRS is extremely behind, and the campuses are overloaded. Work is being shifted to IRS campuses that have more staff available to help with the backlog. The following comes directly from the IRS liaison:
“The IRS understands the importance of timely processing of tax returns and refund issuance. We have processed all error free returns received prior to 2021 and continue to work the returns that need to be manually reviewed due to errors. We are rerouting tax returns and taxpayer correspondence from locations that are behind to locations where more staff is available, and we are taking other actions to minimize any delays. Tax returns are opened and processed in the order received. As the return is processed, it may be delayed because it has a mistake including errors concerning the Recovery Rebate Credit, is missing information, or there is suspected identity theft or fraud. If we can fix it without contacting you, we will. If we need more information or need you to verify that it was you who sent the tax return, we will write you a letter. The resolution of these issues depends on how quickly and accurately you respond, and the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return…If you filed electronically and received an acknowledgement, you do not need to take any further action other than promptly responding to any requests for information. If you filed on paper, check ‘Where’s my refund?’ on IRS.gov. If it tells you we have received your return or are processing or reviewing it, we are processing your return, but it may be under review. We’re working hard to get through the backlog. Please don’t file a second tax return or contact the IRS about the status of your return.”
As always, we appreciate your business and will be back with another update soon! In the meantime, Stay cool and check out our updated “About us” page, as well as new updates on our Facebook, Instagram, and other social media!