If you have children in your home, chances are, you saw money drop in your bank account starting this week from the IRS as advance child tax credit payments. Hopefully most of you were expecting this to happen, but there is a chance that the money could have caught you by surprise. While the money may be nice, there are certain households that may want to second guess these payments each month. Mecham Dicus & Company is here to talk about situations where you may want to unenroll for these advance child tax credit payments.
Why Are We Getting Advance Child Tax Credit (CTC) Payments
For many Americans, the last 18 months have proven extremely difficult. These advanced CTC payments are meant to alleviate the financial stress that the pandemic has brought into our lives. This money is simply an early payment that you would normally get in a lump sum when you file your taxes, in the form of a return. However, many households should proceed with caution.
Reasons You May Want to Unenroll from the CTC Payments
Following are some of the reasons you may want to unenroll from getting these advanced payments each month.
– High Income Households: If you exceed the income thresholds that are in place for the CTC, you won’t be seeing that much money when tax season comes around. For every $1,000 you are over the limits, you will lose out on $50 per child.
– Changes to Dependents: If you are a single parent and you claimed your child last year only to find that your spouse gets to claim them in the coming year, you will not be eligible for the CTC on those taxes and would end up paying the money back.
– Larger Refund: If you stay enrolled in the advanced CTC payment program, you can get up to $300 per month. If you opt out of the program, you can get the full $3,600 at tax time instead. Many taxpayers rely on this lump sum of money each spring to pay off debt or put into a savings account and may want it to come all at once rather than trickle in throughout the next six months.
– You Live Outside the US: If your main residence was outside the US for more than half of the 2021 year, you may want to opt out of the CTC payments since you will not be able to qualify for the CTC at tax season.
Tax Preparation, Filing, Planning & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
If you have questions about what these CTC payments are and what it will mean for your taxes at the end of the year, you can count on Mecham Dicus & Company to give you the answers you need. We have a team that can help prepare you for the upcoming tax season. Call us today!