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Message
re: Please help me understand the Advance Child Tax Credit
Posted on 7/15/21 at 11:24 am to Brettesaurus Rex
Posted on 7/15/21 at 11:24 am to Brettesaurus Rex
quote:
So I don’t know why anyone would opt out frankly who is due to get it.
Many people would rather get a bigger chunk at the end of the year, vs getting it in drips and drabs throughout the year.
They are afraid they will just blow the money if it comes in in small amounts, whereas if they get a big chunk at once, they are more likely to make a major purchase, save it, pay off debt, etc.
It's the personal part of personal finance.
1
Posted on 7/15/21 at 11:52 am to CollegeFBRules
quote:
You can opt out of it.
I tried & finally gave up after all the crap it takes to opt out.
Posted on 7/15/21 at 11:55 am to LSU
I did hear about the amount of work to opt... it just isnt worth it. sounds like a major PITA
Posted on 7/15/21 at 12:01 pm to LSUFanHouston
quote:
Many people would rather get a bigger chunk at the end of the year, vs getting it in drips and drabs throughout the year.
They are afraid they will just blow the money if it comes in in small amounts, whereas if they get a big chunk at once, they are more likely to make a major purchase, save it, pay off debt, etc.
It's the personal part of personal finance.
I understand that aspect of it. Most of the sentiment I’ve seen is worried about higher taxes to pay. Which that specifically doesn’t make sense to me. But hey I guess it’s all personal preference .
Posted on 7/15/21 at 12:32 pm to Sterling Archer
How does this work if I had a kid in January of this year? Will I just get it as a lump sum come next year in April when I file taxes or can I sign up to get the $300 per month?
Posted on 7/15/21 at 1:00 pm to YankeeDoodle
quote:
How does this work if I had a kid in January of this year? Will I just get it as a lump sum come next year in April when I file taxes or can I sign up to get the $300 per month?
I assume because the government doesn't know you have a kid, you won't be able to claim anything until the next time you file your taxes. So you'll get the full credit (assuming you don't hit income limit)
Posted on 7/15/21 at 2:21 pm to YankeeDoodle
quote:
How does this work if I had a kid in January of this year? Will I just get it as a lump sum come next year in April when I file taxes or can I sign up to get the $300 per month?
Lump sum is option. Also, supposedly later this year (perhaps August) you will be able to log into the child tax credit portal and tell them you have a new kid, and they will start issuing advance payments after that.
Posted on 7/15/21 at 2:30 pm to YankeeDoodle
They’re going to be opening up a way to update your dependents in August I think.
Posted on 7/15/21 at 4:36 pm to adamsblueguitar
Vote buying scheme.
Posted on 7/15/21 at 8:43 pm to Brettesaurus Rex
quote:People who are bad money managers or have no discipline to not spend it. There is literally zero downside to getting this payment. You are going to get it anyway when you file taxes in ~8 months. Money now is always worth more than money in the future. The smart thing to do is take this advanced payment and let the money go to work for you so you end up with more money than if you opted out. At a minimum, accept the advance payment, put it in a savings account, and give the middle finger to the government by not giving them an interest free loan. Then use it to pay (if applicable) the difference in tax bill when you file. However, some people just cannot hold back and must spend everything they have in their account so I could see only those people wanting to opt out.
So I don’t know why anyone would opt out frankly who is due to get it.
This post was edited on 7/15/21 at 8:45 pm
Posted on 7/16/21 at 1:27 am to TigerTatorTots
quote:
There is literally zero downside to getting this payment
Well, in my situation it's costing me $375 to call my attorney for advice on how I'm supposed to share this with my ex.
Posted on 7/16/21 at 7:48 am to tigeraddict
I have 2 under 16
I got 500 bucks from IRS deposited in the bank couple days ago.
I got 500 bucks from IRS deposited in the bank couple days ago.
Posted on 7/16/21 at 9:52 am to adamsblueguitar
I got $225 yesterday. My kid turned 18 this year. I wasn't expecting anything.
Posted on 7/16/21 at 11:37 pm to TrapperJohn
quote:
Well, in my situation it's costing me $375 to call my attorney for advice on how I'm supposed to share this with my ex.
Should be simple: whoever is claiming the kid(s) on their 2021 taxes gets this credit.
Now the IRS doesn't know your specific divorce agreement, so they are automatically going to send the monthly payments to whoever claimed them on 2020 taxes. If the parent who claimed them for 2020 is not claiming them for 2021, just keep the money in savings and plan to pay it back to the IRS at tax time. The other parent will get the full credit amount when they file their 2021 taxes.
Posted on 7/16/21 at 11:41 pm to ConfusedHawgInMO
quote:
I got $225 yesterday. My kid turned 18 this year. I wasn't expecting anything.
Put it in savings and plan to pay it back at tax time. If a child turns 18 before Jan 1, 2022 they do not qualify for the credit. No penalty, just don't plan on keeping it.
Posted on 7/17/21 at 10:20 am to Lightning
So this is supposed to happen automatically? I didn't get squat
Posted on 7/17/21 at 1:03 pm to thunderbird1100
quote:
(good lord)
Posted on 7/18/21 at 8:22 am to TigerTatorTots
quote:
People who are bad money managers or have no discipline to not spend it. There is literally zero downside to getting this payment. You are going to get it anyway when you file taxes in ~8 months. Money now is always worth more than money in the future. The smart thing to do is take this advanced payment and let the money go to work for you so you end up with more money than if you opted out. At a minimum, accept the advance payment, put it in a savings account, and give the middle finger to the government by not giving them an interest free loan.
So is that the only concern? I hadn't bothered opting out because I don't know all the tax rules for who would get the payments and who wouldn't.
Is the IRS going to treat these advance payments as taxable income, or does it just simply mean the Child Tax Credit won't come into play as a lump sum when you file in the Spring?
Posted on 7/19/21 at 11:20 am to adamsblueguitar
Just my opinion, but i believe they are giving it early with hopes that the ignorant masses won’t know how this works and they end up owing the IRS next year and can’t pay it, so they will tack on the interest to get more money from people.
Posted on 7/19/21 at 11:25 am to ragincajun03
quote:
Is the IRS going to treat these advance payments as taxable income, or does it just simply mean the Child Tax Credit won't come into play as a lump sum when you file in the Spring?
Not taxable income.
When you file, you will calculate your total credit, subtract the advance amounts rec'd, and then you will claim, the balance on your tax return.
If everything is "clean" and there no AGI limitations and your kids are between age 6 and 17, in 2020 you claimed a $2,000 credit, in 2021, you will claim a $1,500 credit but also got $1,500 in advance payments, so $3,000 total.
This is confusing so many people because while it has similarities to stimulus payments, there are some big differences.
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