AKRON, Ohio — Advance child tax credit payments are set to go out to millions of Americans starting next month. But that may not be the best option for all families. If you plan to opt out, you only have until Monday.
Beginning July 15, the government is sending more help to American families in the form of advance child tax credit payments, helping struggling parents make ends meet.
"Bills come every month. So now you have money available monthly to go toward those bills," explains A'Shira Nelson, Tax Manager at Apple Growth Partners.
For those who qualify, we're talking $300 a month for each child age 5 and under. Or $250 a month for children ages 6 to 17. Sounds great, right? But tax managers say you need to understand how accepting those payments will impact your tax situation down the line.
"Whatever you take in advance now, it reduces your potential refund in the future," says Nelson. "That’s what a lot of taxpayers have to be warned about."
So if you're used to getting a refund during tax season, it will be reduced dollar-for-dollar by the advance payments you receive now. And unlike stimulus check money, any overpayments sent to you could result in a tax bill.
"You are liable if you receive an overpayment. You will have to pay this money back when you file your 2021 tax return," Nelson adds.
So what should you do? The advance payments will begin automatically. If you'd rather wait to get your child tax credit when you file taxes next year, you must opt out by Monday.
Simply head over to IRS.gov and look for the child tax credit link. If you are married, both you and your spouse must complete the process, which includes verifying your identities. And once you opt out, there's no getting back in.
"There is no option, at this current time, to re-enroll in future. So, it’s a one and done type of situation," according to Nelson.
3News' Brandon Simmons personally went through the process of unenrolling this week because he prefers having a lower overall tax bill or even a refund when he files each year. Be warned: The ID verification is a lengthy process, so you don't want to wait until Monday at the last minute to do it.
Related Stories: