Parents should begin seeing the first of six-monthly child tax credit payments in their accounts or mailboxes today. Partner with Metairie accounting firm Malcolm M. Dienes, Johnathan Stoltz said income limits changed for the child tax credit so be sure to check on the amount you receive.
“If a family makes less than $150,000 a year and a single parent makes less than $112,500, they’d be eligible for the full credit. If they make over that they will still be eligible under the old rules for the $2,000 credit potentially,” said Stoltz.
The new credit is $3,600 for children under six and $3,000 for ages 6 to 17.
The advance child tax credit payment is part of the American Rescue Act to help reduce child poverty by fifty percent.
Be aware that if you are used to receiving a large refund to go towards tuition, etc. your tax refund will be less because you are receiving those funds upfront. Stoltz said depending on your tax situation, for example, if you typically owe taxes versus receiving a refund, you might want to visit the child tax credit portal at IRS.gov and opt out of receiving payments.
“Some taxpayers who typically owe money or things of that nature may want to opt-out. It could be beneficial to opt-out and not receive this monthly because it will be trued up when you file your tax return in early 2022,” said Stoltz.
Stoltz said you will receive your payment typically the same way you received your stimulus check last year.
“So, if you filed your tax returns in the past, either 2019 or 2020, then they’re going to determine your eligibility based on that and they’re going to use the same bank information to direct deposit the amounts into your account,” said Stoltz.
If you share custody of your children, Stoltz said the payment will go to the parent who listed the child as a dependent last. In those situations, he said it is probably best to have parents opt out of the payments and settle things up when taxes are due next April.
For more information visit IRS.gov Child Tax Credit.
Comments