Lucas Casarez | Level Up Financial Planning
Advanced Child Tax Credits began rolling out in July and will continue through the end of the year. Since this is such a unique event I’ve been answering numerous questions for clients and friends — here’s a summary of the big questions:
If you need a refresher on some of the basic details, be sure to check out our original article https://northfortynews.com/
What if I haven’t received my payment?
You may have not received your payment for the following reasons:
- You didn’t claim a dependent on your most recent tax return
- Your income may have exceeded the phaseout limits
- It may have come by check or debit card and not by direct deposit
Can I change my bank account on file?
Yes, you’ll be required to set up a login for the IRS portal. Once set up it is pretty easy to add or change your bank account on file.
Can/should I opt out of the monthly payments?
You can opt-out of the monthly payments if you prefer, but if you are eligible for the tax credit, you will still receive the remaining credit when you file your 2021 tax return. Here are a few scenarios when you may want to opt-out:
- If you normally owe taxes when you file in the spring, opting out of the advanced payments will allow them to be added as a credit when you file your 2021 tax return.
- If you will not be claiming your dependent for the 2021 tax year, then you may be required to pay back the entire monthly tax credit you received.
- If you expect your income to increase significantly in 2021 and phase you out of being eligible for the advanced child tax credit.
- If you’re worried that your spending habits will increase and put stress on you in 2022 when the monthly payments stop.
What if we have a child or adopt in 2021?
If you add an additional dependent in 2021 the IRS doesn’t actively receive this information. The IRS plans to update their portal to allow you to add your new dependent and begin receiving the advanced child tax credit, but as of the beginning of August that feature hasn’t yet been added.
Where can I manage my child’s tax credit payments?
Here is the official IRS site to manage your advanced child tax credits:
In addition to managing your payments, there is a tool to check your eligibility for the advanced child tax credit, and a tool for non-filers to provide information to verify your eligibility for the advanced child tax credit.
It is important to remember that this new monthly payment, as well as, the additional special tax credit is currently only for the 2021 tax year and may not carry into future years.
Lucas Casarez is a husband, father of three amazing kids, and a Certified Financial Planner™. He founded Level Up Financial Planning, one of the few fee-only financial planners in Northern Colorado. The mission of Level Up Financial Planning is to guide his clients in taking their financial confidence to the next level.
Have a personal finance question you would like me to answer in a future week?
Lucas Casarez (he, him)
Certified Financial Planner®