Many tax payers received a child tax credit and will soon receive another one. But, what if you don’t qualify? Do you have to pay it back?
More money is on the way for more families. Next week, the first round of child tax credit payments rolls in. If you qualify, you’re going to get more this year. Up to 300 bucks per child per month until the end of this year thanks to the American Rescue Plan. The payments are automatic for parents who previously filed taxes. Should you stay enrolled or opt out?
Many people have a very different situation financially in 2021 than they did in 2020 during the pandemic. Some people got laid off, some people’s income went way down, and so with the amount of stimulus checks, the amount of tax credits, the amount of unemployment checks, that may be in the past for you and your income’s higher, and so you need to be careful, and being in a different tax bracket and you really need to adjust for that.
Experts recommend, if you don’t need the cash, opt out and get your child tax credit in one big payment on your 2021 taxes. One, that would lower how much you owe, and two, if your circumstances change for your 2021 return, you might have to pay back some of that money.
There’s some great online calculators that allow you to plug in your income, how many kids you have, your situation, and it’ll estimate your taxes for free. Here we are halfway through the year, I think it’s a good time for people to sit down and really look at their paychecks and see how much has been withheld. You really want your tax withholding to match your actual taxes you owe pretty closely at the end of the year.
If you want to un-enroll from the child tax credit payments, it’s too late for July, but not for August. We’ve got that info plus the free online calculators, and we answer more of your questions about eligibility at this link.