Tax Day: How the Child Tax Credit can impact your refund
Tax Day is less than a week away. After two years of extended deadlines due to the pandemic, the deadline returns to April this year.
Due to Emancipation Day observed April 15 in Washington, D.C. Tax Day has been pushed back from its usual date to April 18, giving taxpayers an extra weekend to file.
Although, Monday is the deadline, you can ask for an extension.
If you owe money, that does not necessarily mean that you get to extend your payment.
I spoke with Ryan Fair, a Certified Public Accountant at Korhorn Financial Group who clarified what that means.
“If a payment’s necessary, that is still due even if you file an extension. That’s a common misconception where people will think ‘I’ve got 6 extra months, I don’t have to pay my taxes since I filed an extension.’ But, no, an extension is only an extension to file your taxes,” said Fair.
Fair said that if you request an extension to file, you’ll have to come up with an estimate of the taxes you owe and pay that by April 18.
Some taxpayers may notice a little less in their refunds this year.
By taking a child tax credit, taxpayers could be setting themselves up for a higher tax bill the next year.
If you had a dependent change, like a new child or a child that aged out of qualifying for a tax credit, your refund will be adjusted.
It’s also possible that you made less than the threshold of $75,000 or $150,000 when filing jointly back in 2020. However, the child tax credit was a prepayment for the 20-21 tax season. And if you got a raise or changed jobs and made more money than that threshold in 2021, it’ll be reflected on your income.
Fair broke that down further.
“On the actual 2021 tax return is when we reconcile what they actually should have received with what they did receive. And so, a lot of times they weren’t really entitled to the full payments of what they received,” said Fair.
More information on Tax Day can be found here.