ATLANTA — The IRS is notifying thousands of parents about financial help coming their way, including an option to delay payments until next year.
The Child Tax Credit could mean as much as $3,600 a child. Families will start receiving checks beginning July 15th unless they opt out. Financial experts say delaying payments until 2021 may be a good idea for some.
The expanded Child Tax Credit will provide families with a maximum of $3,600 for each child under 6, and up to $3,000 dollars for each child between 6 and 17.
The money is technically for next year, but the government knows many can’t wait.
“Money has value and importance right now,” says Dr. Patrick Washington of the Morehouse School of Business Administration and Economics. “People are struggling.”
So, the IRS is offering an advance on the payments. Families can receive half of the money they’re due beginning with monthly payments that start July 15 this year.
Dr. Washington says most people will take the advance.
“We know the overwhelming majority of people need to take that money right now,” says Dr. Washington.
Some, however, may want to forgo the advance and get one lump sum next year.
The amount of your checks will be based on the age of your children and your finances in 2021, but any advance will be an estimate of what you’re owed since the IRS won’t have your tax return until next year. The estimate will be based on information from your 2020 tax return.
If you get a big raise during 2021, it might put you on an income level where you no longer qualify for the advance. If you don’t opt out, you could receive an advance you don’t deserve.
“Then you’re in a situation where you have a tax liability,” says Dr. Washington. “You have to pay the credit back or it reduces the amount of the refund.”
As long as the IRS has a recent tax return from you, you don’t have to do anything else to get the advance. To decline, you need to notify the IRS through a web portal they’ll open in the coming weeks.
Next year’s money will come after you’ve filed your 2021 tax return.