Monthly News: June 2021

The IRS is using information from Form 1099-K for audits.  If your business makes sales by credit card, it is important to correctly report the income on your income tax return.  If you don’t report the income from credit card sales on the correct line of your income tax return, it could cause an audit.

The IRS is beginning to pay refunds from the unemployment benefits tax break.  During tax season the amount of unemployment that was taxable was reduced by new tax laws.  If you received unemployment and filed your tax return before the tax change, the IRS will be sending you additional money for your refund to reflect the tax change.

It is possible that you may be required to repay the advance child tax credit.  Some parents will end up owing more taxes next year due to the advance payments.  If you normally owe taxes when you file your return, receiving the advance payments could cause you to owe more taxes when you file your return. 

There are other reasons which could have an impact on the amount of child tax credit that you are eligible for in 2021.  A higher paying job or your spouse going back to work could affect the amount of your child tax credit.  An increase in business income could have the same effect on your credit.  If you took money out of your retirement account, sold stock or property, and increased your income in 2021, it could also reduce your child tax credit.

If you decide to opt out of the advance child tax credit payments, you can use the IRS Child Tax Credit Update Portal.  It allows families to verify their eligibility for the payments and to opt out from receiving the monthly payments so they can receive a lump sum when they file their tax return for 2021.