TAX TIP OF THE DAY| Spending Virtual Currency
TAX ALERT | First Batch of 2021 Advance Child Tax Credits Issued by IRS
Last week American families began receiving advance monthly payments of the Child Tax Credit. Based on 2020 tax return information (or 2019 if your 2020 return has not yet been filed), the IRS will issue 50% of your anticipated 2021 Child Tax Credit in advance, spread over 6 monthly payments from July through December 2021. The remaining available credit will be claimed on your 2021 tax return.
Children under age 6 are eligible for up to $300 per month ($3,600 in total for 2021 tax year), and children ages 6 through 17 are eligible for up to $250 per month (or $3,000 total for the year). The credits begin to phase out at $75,000 adjusted gross income for single taxpayers, and $150,000 for married filers.
Payments received will be reconciled on your 2021 tax return, and any excess payments must be paid back. Please consult with your tax advisor on whether you should opt out of receiving the advance payments, particularly for taxpayers who expect their 2021 adjusted gross income to exceed the phase-out threshold.
The IRS has provided tools to help determine eligibility for the credit, as well as a taxpayer portal to manage payments (or opt out). For more information, please visit the IRS website at Advance Child Tax Credit Payments in 2021 | Internal Revenue Service (irs.gov).
IMPORTANT TAX FILING DATES | Keeping You Prepared and On Time
Tax Filing Deadline | Monday, May 17, 2021
2021 RETIREMENT PLAN LIMITS | As Set by the Internal Revenue Service
For the 2021 tax year, the following are limits set by the IRS for contributions to your retirement plan(s).
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is remaining at $19,500 for the 2021 tax year.
The limit on annual contributions to an IRA remains unchanged for the 2021 tax year at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains at $1,000.
Under the SECURE Act passed in December 2019, significant changes were made to IRA and retirement plan rules. A few of the most impactful changes include:
- Repeal of the maximum age for making traditional IRA contributions at age 70½.
- Increase in the Required Minimum Distribution (RMD) beginning age from age 70½ to age 72 for retirement plans and IRAs.
- Partial elimination of the popular “stretch IRA” strategy.
The IRS has also recently made updates to the life expectancy tables for calculating required minimum distributions. These changes take effect on January 1, 2022.
(Source: IRS.gov )
2021 Tax Season Checklist
To prepare for the tax filing season, there are several things you should take into consideration.
Review our 2020 tax filing season checklist to plan accordingly.
WHEN SHOULD I EXPECT MY TAX FORMS? | What You Need to Know
RECENT TAX INSIGHTS | Making Sense of Tax Season
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