I’ve received a few questions about the ADVANCED payments on Child Tax credits, and decided to share my thoughts with you all.
Unless you really need the advanced child tax payments, I recommend you OPT OUT of receiving them. These payments are ADVANCES on child tax credits you’re expected to receive in 2021. The advancement is based on your 2020 tax return, BUT we all know a lot can change in a year.
This Bloomberg article explains why I’ve taken this position, and I’m highlighting a few points below:
- Many tax professionals are concerned about clients having to pay money back next filing season, due to changing circumstances with their jobs and salaries.
- Individuals who get a new job or received a raise in 2021 may find themselves owing money to the government if their monthly payment ends up being too high
- The IRS hasn’t adjusted the Form W-4, which workers fill out to let their employers know how much money to withhold from their paychecks, to account for the changes.
If you’d like to opt out, please follow the instructions on this IRS webpage (click here) which explains how and when you can do so.
That’s all for now!