Families can begin receiving child tax credit checks in July
CHARLESTON, S.C. (WCSC) - Starting next month, parents with children under 18 may find themselves with more money in their bank accounts thanks to a chance in how child tax credits will be handed out.
But some families might find they will be better off by opting out of the checks.
Thomas Spade, an accountant and instructor at the College of Charleston, says this is essentially the same tax credit that has been around since the late 1990s. What’s new, he says, is the way the credit is being administered, which could lead to sticker shock for families when they go through their taxes next year.
CLICK HERE for more information on the Child Tax Credit.
For most people, the amount of the credit increased from $2,000 to $3,000 per child, or $3,600 for each child 6 and under, but as part of the American Rescue Plan, the federal government will start distributing half of those credits in advance starting next month.
That means people who count on a tax refund would see a smaller check from Uncle Sam, or could even end up owing money.
“Essentially, instead of making you wait until you file your tax return to claim a child tax credit against your tax liability, they’re sending it to you monthly in installments so you’re getting the benefit of it over time instead of having to wait until you get your tax refund,” Spade says.
Spade recommends people who have kids and usually get a refund of $500 or less consider opting out to avoid possibly owing money at tax time.
The payments will start going out automatically next month unless you opt out.
If you want to opt out, you can do so by going to the IRS’s website.
The full amount of the credit is available for households filing jointly with incomes of up to $150,000; or single parents with incomes of up to $112,500.
Starting July 15, these households will receive $300 or $250 every month for each child in those respective age ranges; the remainder of the credit can be claimed when filing 2021 tax returns early next year.
Eligible families who get their refunds from the IRS through direct deposit will see these payments in their bank account; those who don’t use direct deposit will receive their payments by mail.
In an interview on “CBS This Morning” on Monday, White House Press Secretary Jen Psaki said the Biden administration sees the advance payments as a way to help working families, adding the president wants to keep the option there long-term.
“The president has proposed to extend it by five years and he’s open to having a conversation with Congress, with members about what more they want to do because he thinks this is a central benefit that will help families, help get women back to work, over a million have left the workforce during the pandemic, so he’s going to continue to fight for this and he has proposed extending it in his American Families Plan,” she said.
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