President Biden is about to send out the first “child tax relief payments” on 7/15. If you have children under 18, you may see this tax credit hitting your account next week.
Many of our clients are wondering if they should keep accepting stimulus money.
In this situation, our answer is “probably not.”
Here’s why.
Your children’s ages, filing status and household income all affect how much tax credit your family qualifies for.
And unlike the last stimulus payments, any advance credit you didn’t actually qualify for when your 2021 return is done has to be repaid.
Families whose 2021 tax return lists income over $150k start phasing out of eligibility for this credit, which means they will need to repay the IRS.
The Good News: If you opt out but are still eligible on your 2021 tax return, you’ll get the credit anyway—it will just be in one lump sum after submitting your taxes in 2022.
We recommend opting out and getting the money later if you qualify, rather than accepting the money and potentially having to pay some or all of it back.
How do I opt out?
This CNET article does a great job explaining. Here is a quick excerpt.
- Head to the new Child Tax Credit Update Portal and click the Manage Advance Payments button.
- On the next page, sign in using your IRS or ID.me account. If you have neither, the page will walk you through setting up an ID.me account. You’ll need an email address, a photo ID, your Social Security number and a smartphone or tablet to verify your identity.
- On the next page, you can see your eligibility and unenroll from the monthly payments.
Note: If you’re married and file jointly, both you and your spouse need to opt out. Otherwise, your spouse will still receive half of the payment.
Have questions?
Don’t hesitate to message us or call our office.