Tag Archives: Child Tax Credit

August 2021 Financial Planning and Capital Market Review – By John Kvale

Hello and Welcome to our August 2021 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

Hope you enjoy!

August 2021 Video

YouTube

Financial Planning Tip(s)

Unemployment Fraud Alert

Multiple frauds occurring in continuous weeks, led us to write this post, reminding those that the fraudsters are still at it.

Their latest game…using stolen Socials and Employment information to gain unsuspecting employers Unemployment compensation.

While likely some accidentally fall through the cracks, we have yet to experience anything other than a mild inconvenience….

But do not let your guards down and if a victim, keep your eyes peeled for other items for the near term!

Child Tax Credit Confusion

After repeated confusion, here in this post we outline the new ADVANCED child tax credit payments than sneakily commenced several months ago…

Also a warning of an overworked IRS to keep line of sight to the funds in case we need to pay them back in the form of a higher tax bill when completing our 2021 Form 1040 Personal income tax return in April of 2022!

Capital Market Comments

Kyle Bass Forecasts

In this podcast derived post, we re-visit Kyle Bass again after a few year hiatus…

Here are his latest forecasts…. hopefully they come true

  • The Federal Reserve will continue to support the markets with continued purchases.
  • Federal Reserve feels responsible for Capital Markets … i.e. Every Federal Reserve member has a Bloomberg Investment terminal on their desk and post public talks, Fed members go back to their office to check the markets reactions to their comments.
  • Much more inflation than actually as printed by CPI – (Consumer Price Index) Example of car price increases up 300% over last thirty years, but CPI auto costs increased 5% over that period.
  • Cost of Food increases may cause social inequity problems.
  • Oil hits $100 per barrel this year … due to mal investment over the last 7 years.
  • Short term interest rates not to go higher than 1.5% and long term (10 year) rates will not go higher than 2.5%. i.e. Bernanke Helicopter speech outlines the difficulty in raising rates a lot once they are at a lowered level for some time.
  • We push through the Delta Variant and there is a REAL re-opening effect that works its way through the economy (Hope this is correct!)

Have a Great Day, Talk to You at the End of September!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Child Tax Credit Confusion and Clarity … Many Receiving Payment Who Have Never Had Credit Before …

Approximately two and a half months ago, advanced Child Tax Credit funds commenced deposit on the IRS’s estimate of who is deserved (The IRS is juggling a lot of balls right now!)

We have been in contact with folks who have never received a Child Tax Credit that are receiving the advance…. with the note above of how busy the IRS is, it may be a good idea to keep line of sight to these funds until you file your taxes, just in case you need to cough the advance back up at tax time in the form of a higher amount due!

IRS Statement of Child Tax Credit and Thresh Hold Levels of Qualifications

This is the best summary we could find, although a bit deep, here from the IRS :

A1. For tax year 2021, the Child Tax Credit is increased from $2,000 per qualifying child to:

  • $3,600 for children ages 5 and under at the end of 2021; and
  • $3,000 for children ages 6 through 17 at the end of 2021.

Note: The $500 nonrefundable Credit for Other Dependents amount has not changed. For more information about the Credit for Other Dependents, see IRS Publication 972, Child Tax Credit and Credit for Other Dependents.

A2. Yes. The Child Tax Credit phases out in two different steps based on your modified adjusted gross income (AGI) in 2021.

The first phaseout can reduce the Child Tax Credit to $2,000 per child.

  • That is, the first phaseout step can reduce only the $1,600 increase for qualifying children ages 5 and under, and the $1,000 increase for qualifying children ages 6 through 17, at the end of 2021.

The second phaseout can reduce the remaining Child Tax Credit below $2,000 per child.

For additional information on the amounts of modified AGI that reduce the 2021 Child Tax Credit, see Q C4 and Q C5, below.

A3. For purposes of the Child Tax Credit and advance Child Tax Credit payments, your modified AGI is your adjusted gross income (from the 2020 IRS Form 1040, line 11, or the 2019 IRS Form 1040, line 8b), plus the following amounts that may apply to you.

  • Any amount on line 45 or line 50 of the 2020 or 2019 IRS Form 2555, Foreign Earned Income.
  • Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.

If you do not have any of the above, your modified AGI is the same as your AGI.

A4. The Child Tax Credit begins to be reduced to $2,000 per child if your modified AGI in 2021 exceeds:

  • $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
  • $112,500 if filing as head of household; or
  • $75,000 if you are a single filer or are married and filing a separate return.

The first phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

A5. The Child Tax Credit won’t begin to be reduced below $2,000 per child until your modified AGI in 2021 exceeds:

  • $400,000 if married and filing a joint return; or
  • $200,000 for all other filing statuses.

The second phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

Have a Great ” Child Tax Credit Advance Payment Deep Dive” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

First Full Week of School in the Books … Partial Week Next Week, Labor Day ! Getting Ready for Fall Sports… Child Tax Credit Preview … Late Summer Friday

Whew….. the first full week of school is thankfully almost in the books…..

Always say after the first or second full week “Don’t know how we are going to make it!” But we do!

The Sleep schedule is getting better, up at least 10-15 minutes for the 13 year old before departure time

He even got the choppers brushed four out of five days!

Just when the schedule steadies… next week has an early release late in the week followed by Monday Labor Day Holiday!

As a reminder, Monday week is the official Labor Day Holiday! (Maybe that is for return to school help …haha)

Fall Sports on the Horizon…

As the days get shorter on light, the fall sports calendar starts to get in gear!

Child Credit Confusion

We have run into repeated Child Tax Credit Confusion and are planning an early next week longer post with the IRS notes for clarity…. we really have had a lot of questions and have been somewhat confused ourselves …

It’s a Friday and most of that was last week, but we are heading into a late Summer Friday on the weekend before a shortened week…

Enjoy, talk next week and have a Great Weekend,


John A, Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Lucky Three it Was (Corrected 1099), Green Light for Early Filers… Tax Update… Child Tax Credit Delayed Filings and Refunds

Down from hundreds just a few years ago, on Friday, as mentioned in the break in announcement, there were only THREE Corrected 1099’s in the initial corrected run.

We have touched base with you lucky ones and as a side note the corrections were small.

Green Light for Early Filers

Green Race Flag

Ok to File !

For those early filers that have patiently waited for our Green Light to file…

Green Light! You may go forward and file!

Fraud Causes Possible Delays

Earned Income Tax Credits and Child Credits can frequently result in an extra Refund…

In recent years, fraudsters have taken notice and the IRS has initiated laws to prevent this abuse.

Due to the abundance of fraud and the laws fighting these fraudsters, the IRS has issued a statement that refunds and filings will be delayed.

No need to rush your filing if you have multiple child credits or earned income credits… Early to Mid March is the quickest it will be processed…

Coincidence from Q2 2020 Newsletter

Our editor has a long article that deals with the IRS, and Audits which we previewed here.

The following graph seemed confusing to us, so we left it out … of no coincidence now, given the above notification, the largest number of Audits, and successful audits, have dealt with the Earned Income Tax Credit…

EIC Audit 2017 and 2018 Filings

Needless to say if you have Child Tax Credits or EITC’s make darn sure you dot the i’e and cross the t’s … bad folks in front of you have created concern for the IRS!

Have a Great “Green Light” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents