You’ve probably already heard about it, and you probably already have a checklist of what you’re going to spend it on.
Last month, the IRS announced that there is going to be a new Enhanced Child Tax Credit, and it will take place via monthly deposits starting in July.
BUT, you have the opportunity to opt out of these monthly payments, and you just might want to forego the immediate money.
According to Yahoo Finance, “the monthly payments would translate into approximately $250 to $300 (per month) for parents,” and that sounds all fine and dandy on the surface.
But, sometimes things on the surface level are just not as good as one might think.
There are three reasons you might want to opt out of this monthly payment system.
First, you might just want to receive your tax credit as one lump sum when you do your 2021 taxes next year.
I didn’t even know this was an option!
You might also be concerned that you will somehow get an overpayment by the IRS, and you don’t want to worry about owing them that money back.
Because, you KNOW they will want it back!!
And, you might know that you are going to have a life change this year, and you don’t want to go through the trouble of updating your information on the IRS website.
Sure, there is nothing WRONG with taking the monthly payments, but this monthly system may not be what works for everyone.
Now, if you opt OUT of the month payments, just be prepared — you won’t get ANY of the child tax credit until you do your taxes next year (for 2021).
If you decide to WAIT for next year, you can use that tax credit to offset any tax money you may owe — and that is a HUGE incentive for me!
The IRS is going to open a portal for parents.
Eligible taxpayers who do not want to receive advance payment of the 2021 Child Tax Credit will have the opportunity to decline receiving advance payments. Taxpayers will also have the opportunity to update information about changes in their income, filing status or the number of qualifying children.
I know, this can be a little confusing, because we have already HAD a child tax credit in the system.
The credit amount has been increased from $2,000 to $3,600 for children under age 6 and to $3,000 for children ages 6 to 17.
If you want to stay among those who receive monthly payments, you should start getting them in July, and they should go until December.
Good news for people in Puerto Rico and the U.S. Territories — this tax credit also extends to you!!