Child Tax Credit – It’s Like An Uncle Sam Advance On Your Allowance
When does a good thing become a bad thing? When you forget that the money the government is giving you today as part of the Child Tax Credit (CTC) program is actually money that would normally be part of the Income Tax deduction you take in April. So when April 2022 rolls around and you have to pay your 2021 income tax, and you count on that TCT deduction, that deduction won't be there...so plan your tax burden payment accordingly.
Like An Advance On You Allowance
Today the Internal Revenue Service and the Treasury Department announced millions of American families are now receiving their advance Child Tax Credit (CTC) payment for the month of August as direct deposits begin posting in bank accounts and checks arrive in mailboxes.
Round two is going out to some 36-million families, including mine, which totals about $15 billion.
An IRS news release reminds us that under the American Rescue Plan, most eligible families received the first payment on July 15, and payments up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17 will continue each month for the rest of 2021.
Families will see the direct deposit payments in their accounts starting today, Aug. 13. Like the first payments, the vast majority of families will receive these payments by direct deposit.
IRS SNAFU Is being Fixed
However the IRS does want to alert some of us recipients – less than 15% –who received direct deposits in July, that we might be getting our August payments by mail. They say they are fixing "whatever" that caused that but say no additional action will be needed for the September payment to be issued again by direct deposit. Families can visit the Child Tax Credit Update Portal to see if they’re receiving a direct deposit or paper check this month.
Those wishing to receive future payments by direct deposit can make this change using the Child Tax Credit Update Portal. To access the portal or to get a new step-by-step guide for using it, visit IRS.gov/childtaxcredit2021. If you make the change by 11:59
Put On The Brakes If You Want
Families can stop payments anytime, even after payments begin. They do that by using the unenroll feature in the Child Tax Credit Update Portal. Eligible families who make this choice will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return next year.