Robert C. Davis Accountancy Corporation

IMPORTANT UPDATES REGARDING CHILD TAX CREDITS From July through December 2021, you will receive an advance of your Child Tax Credit. In 2022 when we file your 2021 return, we will calculate your Child Tax Credit. If your advance is more than the amount that you qualify for, you WILL be required to pay it back. Additionally, if you are accustomed to receiving a refund of your Child Tax Credit your refund will be less or you may even owe. It is our advice to opt out of this advance via the portal that the IRS says is coming soon. Please check back on our website or our Facebook page for updates.

2 More Ways Parents Are Benefitting From the American Rescue Plan Act When you think back on this spring, you may fondly recall a substantial deposit made to your bank account by the federal government (if you were eligible). Economic Impact Payments were a focal point of the American Rescue Plan Act (ARPA), signed into law in March, and the payments were even larger for parents with dependent children. But ARPA contains two other provisions that benefit parents: 1. Child cre...dit expansion and advance payments. For 2021, this refundable tax credit has been increased from $2,000 to $3,000 per child $3,600 for children under six years of age. In addition, qualifying children now include 17-year-olds. The child credit is subject to modified adjusted gross income (AGI) phaseout rules and begins to phase out when MAGI exceeds: $400,000 for married couples who file a joint return, and $200,000 for other taxpayers. The increased credit amount ($1,000 or $1,600) is subject to lower income phaseouts than the ones that apply to the first $2,000 of the credit. The increased amount begins to phase out when MAGI exceeds: $150,000 for joint filers, $112,500 for heads of household, and $75,000 for other taxpayers. ARPA also calls for the IRS to make periodic advance payments of the child credit totaling 50% of the estimated 2021 credit amount. The IRS has announced the payments will begin on July 15, 2021. They’ll then be made on the 15th of each month (unless the 15th falls on a weekend or holiday). Recipients will receive the monthly payments through direct deposit, paper check or debit cards. The IRS says that it is committed to maximizing the use of direct deposit. 2. Child and dependent care break increases. For 2021, the amount of qualifying expenses for the refundable child and dependent care credit has been increased to: 1. $8,000 (from $3,000) if there’s one qualifying care individual, and 2. $16,000 (from $6,000) if there are two or more such individuals. The maximum percentage of qualifying expenses for which credit is allowed has been increased from 35% to 50%. So the credit ultimately is worth up to $4,000 or $8,000. But the credit is subject to an income-based phaseout beginning at household income levels exceeding $125,000. The amount you can contribute to a child and dependent care Flexible Spending Account (FSA, also sometimes referred to as a dependent care assistance program) also has been increased. For 2021, it’s $10,500 (up from $5,000 for 2020). The FSA pays or reimburses you for these expenses. But you can’t claim a tax credit for expenses paid by or reimbursed through an FSA. See more

So happy to support the kids getting back out there & playing ball!!

We appreciate our clients so much & hope that you can all continue to give us grace!!

Latest COVID-19 relief bill clears Senate (03-08-21) The Senate passed the American Rescue Plan (H.R. 1319) with various revisions on Saturday, and the bill is being sent back to the House to vote on the revised version. It’s expected that the House will agree to the revisions and the President will sign the bill by the end of the week. The major provisions that we need to be aware of are: A new $10,200 exclusion of unemployment insurance benefits for the 2020 tax year only..., for households with modified AGI of $150,000 or less; A third round of Economic Impact Payments (EIPs) will be going out by the end of this month equal to $1,400 per taxpayer, and $1,400 per dependent (including adult dependents). The payments are advances of 2021 tax credits based on 2020 AGI (2019 if the 2020 return has not been filed), but are phased out at much lower levels than the first two EIPs; Restaurant revitalization grants to cover restaurants’ 2020 losses; and Extension of the Employment Retention Credit and FFCRA paid leave credits. We are monitoring the progress of this bill, and will release additional information when the law is finalized. See more