July 15th 39 million

@garman22 👍 I was not aware that they can opt out... Also correct me if I'm wrong but if this is an advance payment then they'll get a smaller refund when we complete there tax returns and some of the Nikola Tesla juniors will blame us for the smaller refund... Just my opinion

@BobKamman okay correction payments sent to taxpayers Via direct deposit or payments mailed... happy now?

@TiredFarmer thanks for the information...

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@IRonMaN wrote:

Earlier this year, I told a client that I was going to start to prepare returns for only retired clients.  No more dealing with "which kid are we claiming this year" and now we have the added luxury of asking the new question - "how much did you collect in advance payments"?  I had about 2% of my clients that were able to accurately tell me how much they collected in stimulus payments so next year the circus tent is going to be even bigger.  I might have to seriously consider sticking with my "retirees only" plan.

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hahahaa.....i like that thought. 

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@Just-Lisa-Now- wrote:

My daughter is a single mom with 2 kids, she could really use the monthly payments. 

The increased child care credit (she pays close to 15k a year) should reduce her liability enough to make up for the CTC she wont be getting on her tax return.   @TaxGuyBill this will still be non refundable though, right?

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The Child and Dependent Care Credit IS refundable for 2021.  See Sec. 9631 of ARPA21.

Also, for the CTC only half of the increased credit is advanced.  So $1,500 of $3K and/or $1,800 of $3,600.  The remaining $1,500-$1,800 will still be claimed as a credit (subject to phase-out based on MAGI).  So there won't be too much of a "loss" of the credit at tax time because it's substantially offset by the increased credit amount.  If she's used to getting $4,000 for 2 kids, she'll still be getting $3,000-$3,600 (in addition to the advances).  Also the wonky calculation to determine the refundable portion has been eliminated for 2021.

The only cases where I see this being useful are for taxpayers with $0 income tax.  Otherwise they can just adjust their withholding in Step 3 of the "new and improved" W-4 and already get this "advance" via reduced paycheck withholding.  The problem I see is that the higher income folks (who will be phased back to the old $2K numbers) may already be doing this (I know I have several clients who are) and without action on their part, they get both reduced withholding and monthly IRS payments for the same credit.  That's going to leave them with a balance due (and likely underpayment penalties) next April.

I'm still trying to figure out the limitation on reduction of increased credit and how the phase out of the safe harbor amount impacts the reconciliation of excess advance credit.  Somebody really went through the whole checklist of buzz words when they wrote this one.  But I have a 10-hour train ride later this month so I'm hoping that's enough time to make sense of this mess. 🙂  If anyone has any good detailed articles please let me know.  So far I've found some higher level "increase in CTC" overviews but nothing that digs deep into how all of the thresholds work.  The safe harbor phase out starts at a $40K/$50K/$60K threshold and the increased credit phase out uses a $75K/$112.5K/$150K threshold and then we hit the regular $200K/$200K/$400K phase out.

If we're not having fun yet, we soon will be!

Rick

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@BobKamman wrote:

There is some good information on the new CTC in this blog post today

https://procedurallytaxing.com/advanced-child-tax-credit/ 

along with some graphics prepared by the Congressional Research Service (somewhat blurry, helps to click on them to open in a separate window).  

And an IRS official discussed this problem:

"IRS [is] still working on the process for resolving disputes over who is entitled to the advanced CTC payment.  While the vast majority of cases will probably work smoothly, family dynamics dictate that situations will exist where more than one person claims the credit for a child.  Given the abbreviated time frames within which the payment determinations are being made the ability of the IRS to create a system for resolving disputes during the 2021 period will provide quite a challenge and could severely strain its resources.  On the other hand, if the IRS cannot find a reasonable way to handle disputes, it will receive much criticism."

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should be an interesting read.......NOT!!!

Thanks @BobKamman