SOMA Living March 2022

TAX TIPS With tax time quickly approaching, it is important to be aware of recent tax law changes signed into law in March 2021 known as the American Rescue Plan Act (“ARP”). ARP may present you with some additional tax savings and benefits. ARP increases the child tax credit to $3,000 per qualifying child age 6 or older and $3,600 per qualifying child under 6 (up from $2,000 in 2020). The entire amount of the credit is fully refundable (increased from a $1,400 credit during 2020). And now the maximum age for qualifying children is 17 (raised from 16). But there is a phase-out that begins to reduce some of the credit when modified adjusted gross income (MAGI) exceeds $150,000 (married filing joint), $112,500 (head of household) or $75,000 (others). You may have received some of that benefit already since the IRS automatically disbursed advance payments in the amount of 50 percent of the credit from July 1 through December 31. You will need to take that into account on your tax return. Be advised that the IRS acknowledgement letters 6419 may contain outdated information so be sure to check either your monthly bank statements or go to the IRS website advance payments at https:// www.irs.gov/childtaxcredit2021 and click on “Go to the Child Tax Credit Update Portal”. If you have questions regarding your taxes, feel free to contact us at 973-378-3300 or info@ coutodefranco.com.

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