Since the federal tax deadline has been extended until May 17, 2021, this will give you extra time to file your taxes or pay income taxes before it’s due. The Treasury Department stresses that still need to file as soon as possible to receive your refund sooner, rather than the last minute.
Important reasons to consider:
– Child tax credits are larger this year.
– Update bank information for faster refund.
– The most recent stimulus is based on your most recent return (2019 or 2020).
1. Child tax credit (CTC)
This credit has increased from $2,000 to $3,000 per child ages 6-17 years old. It increases even more to $3,600/ child under the age of 6 years old.
Income limits are the following:
| Filing Status | Income Limits | Amount of CTC 6-17 y/o | Amount of CTC 6 y/o below |
| Individual | $75,000 | $3,000/ child | $3,600/ child |
| Married filing jointly | $150,000 | $3,000/ child | $3,600/ child |
| Head of Household | $112,500 | $3,000/ child | $3,600/ child |
There is also a monthly payment which is an advance payment based on your 2021 child tax credit. The IRS is planning to distribute this payment in July 2021. As of writing the IRS has not established the definite distribution guidelines for the payment.
2. Update Your Bank Information
The best reason to update your bank account information is to receive your refund faster and safer.
The IRS even stressed, “Filing electronically with direct deposit is the quickest way to get refunds…”
You can still choose to have your refund mailed to you by check but it’ll take several days compared to having it deposited to your account.
Also, if you missed both or either of the two stimulus payments from 2020, you can claim a new tax break called the Recovery Rebate Credit along with filing your 2020 tax return. This will benefit you if you have significant life changes since the first round of stimulus payments. By reviewing your significant life changes, Local Tax can take advantage of this information and may increase the stimulus payment you deserve and add the fund to your refund (or if you owe taxes, it can lower your tax dues).
3. File your taxes and get the most of your stimulus payment
As part of updating of your bank information, significant life changes in 2020 can change your tax bracket and could impact the simple things.
For example, if you earned more in 2019 than in 2020, you need to make sure the IRS knows about it. The American Rescue Plan Act 2021 will phase out individuals that are earning $80,000 or more and married filing jointly with an AGI of $160,000 will receive a smaller stimulus payment.
Other important credits to review:
– Free 3 year review of your taxes
– Renew your ITIN and take advantage of tax breaks that may benefit your family with a larger refund.
