Reviewing details of the 2021 Golden State Stimulus II and Advance Child Tax Credit Payments

We all enjoy extra cash in our accounts and pockets, and recent news on another stimulus check and money from the child tax credit has everyone’s ears and eyes peeled on when they’ll be receiving those funds.

Some people have already seen those funds deposited into their accounts or mailed to them. Let’s address the upcoming stimulus for those who’re located in California, first: The Golden State Stimulus II.

QUALIFIERS FOR 2021 GOLDEN STATE STIMULUS II:

• Were you a California resident for more than one-half of the 2020 tax year?
  • If yes, continue
• Can you be claimed as a dependent by another taxpayer?
  • If no, continue
• Is your California AGI within the required threshold?
  • Must be between to continue
    • Single
      • $1-75,000
    • Head of Household
      • $1-75,000
    • Married Filing Jointly
      • $1-75,000
    • Married Filing Separately
      • $1-37,500
    • Are you California Wages within the required threshold?
      • Must be between to continue
        • Single
          • $0-75,000
        • Head of Household
          • $0-75,000
        • Married Filing Jointly
          • $0-75,000
        • Married Filing Separately
          • $0-37,500
        • Do you have a SSN?
          • If yes, continue
          • If no, do you claim a dependent?
            • If yes, you can qualify to receive a stimulus
          • You can qualify to receive a stimulus

Beyond this checklist there are 2 more requirements to receive a stimulus:

• First, you must have filed your 2020 tax return by October 15, 2021.
• Second, you must be a California resident at the time of payment.

If you meet all these requirements you will qualify to receive the GSS II. Keep in mind that this is a one-time payment unlike the child tax credit payments.

If you haven’t received the funds already, you can expect to receive it via direct deposit if you received your 2020 tax refund in the form of direct deposit. All others will receive a paper check in the mail. Basically, however you competed your 2020 tax refund is how you can expect to receive the funds.

You can use the FTB’s interactive estimator and learn more by visiting the State of California Franchise Tax Board here.

QUALIFIERS FOR 2021 ADVANCE CHILD TAX CREDIT PAYMENTS:

Beginning in July 2021, many Americans began receiving the Advance Child Tax Credit Payments for the 2021 Child Tax Credit. Here’s how this payment works:

1. Taxpayers will receive one-half of the total credit per qualified dependent over the 6-month period of July through December and should have received the July and August payments by now.
   1. While this is not the most urgent news now, we do urge certain taxpayers to potentially update their status in the Child Tax Credit Update Portal at https://www.irs.gov/credits-deductions/child-tax-credit-update-portal.

1. Taxpayers who share a dependent with another taxpayer on separate returns on different years should potentially unenroll from the advance payments.
   1. The advance payments are programmed to automatically go to the taxpayer claiming the dependent on the 2020 return.  So, if you switch off claiming a dependent with another taxpayer every other year, and you will not claim that dependent on your 2021 return, you should go into the portal and unenroll from the advance payments.

For the latter, you should do this proactively because if you are paid the advance payments and do not claim that dependent on your return for 2021, you will have to repay those payments on your 2021 return.

This can increase your tax liability by $1,500-$1,800 depending on the age of the dependent and is not a surprise you want to come across at filing time.

IN CONCLUSION:

Please reach out to your tax professional to be advised appropriately on your situation. You can contact the Smith Marion & Co. office by calling us at 909-307-2323 or emailing info@smco.cpa.

Looking for a new tax preparer? Visit our website at www.smco.cpa for more information!

— Carlos Carazo, EA, CPA Supervisor