Taxpayer who are eligible to receive the advance payments of the Child Tax Credit (CTC) will be receiving a letter from the IRS in the coming days. Below you will find some added information to help explain the process.
Taxpayers who are eligible to receive the Child Tax Credit as part of their 2021 tax return will have the option to receive 50% of that credit as a series of 6 monthly direct advance payments – known as the Advance Child Tax Credit. Payments will be on the 15th of each month with the first payment scheduled to be issued July 15, 2021.
What this means for those eligible:
- Taxpayers get 50% paid directly to them over 6 monthly installments.
- Taxpayers get the remaining 50% of the Credit on their 2021 tax return.
- This means refunds at tax time will be lower, balances owed will be higher.
IMPORTANT TO NOTE – This is not Stimulus money; this is an advance of a credit a Taxpayer would already get. If the IRS calculates that payment wrong, any extra money a Taxpayer gets is owed back.
Many news outlets are incorrectly reporting the upcoming advance payments as Stimulus.
Taxpayers will be able to opt out of receiving these advance payments and instead take the full Child Tax Credit on their 2021 return. This is what Marnell Financial is officially recommending. However, we appreciate that every situation is unique, and that individual circumstances may change a Taxpayer’s choice or our recommendation.
The IRS should provide a web portal on the following bulletin page to opt out of the Credit before the end of June: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021
We would like to reiterate – the Advance Child Tax Credit is not Stimulus money. If the IRS overpays a Taxpayer, the Taxpayer will owe the IRS that money back.
As always if you have questions, please do not hesitate to contact our office, and speak to a member of our team.