Child tax credit payments are starting
Just as the Internal Revenue Service is gearing up to distribute millions of monthly child tax credit payments to parents, some of them may want to consider skipping the money now—or brace for a tax bill later, financial experts say.
The rules on the advance payments for the Child Tax Credit (CTC) this year might make parents who are near the income eligibility limits choose to opt out so they can avoid repaying the sum at tax time next year.
Single filers making up to $75,000, individuals making up to $112,500 when filing as head of household and married couples filing jointly that earn up to $150,000 are eligible for the payments.
Parents already near these thresholds need to think especially hard if they are getting raises this year and better-paying jobs that will knock them out of income eligibility, they say.
“People have to look at this carefully. They don’t want to be unpleasantly surprised,” said Marianela Collado, co-owner and CEO of Tobias Financial Advisors.
The IRS on Tuesday unveiled the online portal where households can opt out of receiving the advance payments, which will come in monthly installments.
The first payments go out July 15 and June 28 is the deadline to skip the July payment, the IRS says. Aug. 2 is the deadline to skip the Aug. 13 payment and Aug. 30 is the last day to skip the Sept. 15 payment.
For now, someone cannot opt back into receiving the money after they have opted out. The ability to re-enroll will start in late September, according to the IRS.