CAMP HILL, Pa (WHTM) — As part of its COVID-19 relief plan the federal government increased the annual child tax credit and has started issuing advance child tax payments allowing qualifying families to receive an additional $250 or $300 per month, per child from mid-July through the end of the year.
Accepting the advanced child tax payments may or may not be a good idea. It depends on your tax situation.
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“If they usually owe money they may end up owing more,” Ben Bostic said.
Bostic is a CPA and Director with accounting firm Boyer & Ritter. He has written articles about the expanded child tax credits and why opting out may work for some families.
“This really is part of your tax return. This is a credit you would get on your tax return and you are just getting some of it early,” Bostic said.
The Child Tax Credit for 2021 was expanded from $2,000 per year per child to $3,600 for children ages five and under; and $3,000 for children ages six through 17.
“For an older child that is between 6 and 17, you would normally get $2,000 with your tax credit on your tax return, now you will get $3,000. They are going to pay you half of that during the year. So, $1,500 is going to be paid out during the year and $1,500 will go on your tax return,” Bostic said.
Tara Tomlinson is a single mother of two kids. She says getting the monthly payments will help.
“It is huge boost for my family,” Tomlinson said. “It is something that I can use to make decisions right now. This is starting to provide hopefully some normalcy for my kids to be able to go to the local pool, to go to camps.”
If you prefer to have a big refund at the end of the year you may want to “opt-out” of the advance payments.
“There are a lot of people that really like getting a large refund. They just opt out and they are going to get all of this money later. They really aren’t missing out on anything. It is just the timing of the payment,” Bostic said.
You can opt out on the IRS Child Tax Credit Update Portal. The next payment is scheduled for August 13. You must opt out by August 2nd.
Bostic says if you typically owe federal taxes or if your income has increased you may want opt-out of the advanced payments or save them.
“Worst case scenario, if you get all this money and you are not eligible for all of it, you can keep the money and put it in a savings account and just know you may have pay some of it back,” Bostic said.
Click here For more information on the IRS Advance Child Tax Credit Payments.