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Monday, July 4, 2022

Child Tax Credit Update: Some Parents Should Opt Out

While the next stimulus check will arrive on the 15th of September, parents would be able to opt-out of the next Child Tax Credit payment. Parents are afforded the opportunity to opt-out every single month in the event that their circumstances have changed owing to the rolling advance payments. If one were to unenroll from the payments now, they would be receiving the rest of the money during tax time in 2022.

Another reason to opt-out of the payments would also be a pretty good way to avoid repaying the IRS next year if one were to not qualify for the advance payments. 

Why Should Parents Opt Out Of Child Tax Credit?

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The Child Tax Credit payment for this year has seen quite a few changes. Some parents have been receiving a sum of $300 per kid every month rather than waiting for tax time. Nonetheless, they do have to qualify for this advance money. In this situation, it would be in your best interests to opt out if you are deemed ineligible since the IRS has been basing the eligibility criteria on the tax returns of 2020.

Since the advance payments aren’t exactly a tax deduction, they wouldn’t be counted as income on one’s tax return. So in the event that one actually opts out, they won’t be turning down the credit- rather they would be delaying it. 

One of the reasons why parents should opt-out of the Child tax credit payment is because most would rather have one huge payment next year rather than seven smaller payments which would span two years. This could be a justifiable reason for families who have been saving up for a big expense or those who have kept that money aside to pay off outstanding debt. 

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Another reason for opting out of Child Tax Credit payment would be due to the circumstance of the household as well as the tax situation which would change over the course of the year. It could also be an aversion to updating one’s information on the IRS portal.

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