TAMPA — Make sure you talk to your accountant soon and determine if you need to unenroll in the American Rescue Plan’s Child Tax Credit’s expanded benefits.
What You Need To Know
- More money is headed to families in the coming weeks
- It's a new format that could affect your taxes on next year's filing
- Here’s the link to unenroll CTC benefits
Under the Biden Administration’s Covid-19 relief package, the IRS gave new guidance on the advance payments of the Child Tax Credit.
On July 15th, advance payments are set to go to families who qualify.
The payments are automatic.
If you want to claim the tax credit when you file taxes next year, as is customary, you have to unenroll.
If you do nothing, no worries.
The IRS explained you'll get half the payments in monthly installments for the next six months.
The other half you can claim when you file 2021 taxes.
Just remember, due to the pandemic and all the federal government’s relief efforts, this is not normal for how you deal with taxes in a year.
It could present issues said USF’s Lynn Pippenger School of Accountancy Instructor Luke Richardson.
"People need to understand that this is not another stimulus check that you're receiving,” explained Richardson. “This is an advance payment of something you would otherwise be getting, something you have been getting in prior years. So, you may have an unexpected increase in you liability next year."
If you decide to opt out of advance payments, take note.
A post on Twitter showed the process of unenrolling and a notification read "if your spouse does not unenroll, they will receive payments for their portion."
Accountants revealed this quirk on social media.
If you file jointly, make sure both are unenroll to opt out of advance payments.
Richardson said there is an upside because the amount of the CTC has been expanded going from $2,000 for child to $3,000 for children from 6 to 17 years old and $3,600 for under 6.
He said the advance payments will only be half the tax credit.
The expanded child tax credit monthly payments for a family of four can be from $500 to up to $600 dollars a month.
The IRS said an estimated 36 million families are expected to qualify for these payments.