PITTSBURGH (KDKA) — In just a couple of weeks, millions of American families will get a monthly deposit or check from the Internal Revenue Service for the next six months based on the number of minor children.
As KDKA money editor Jon Delano reports, some parents may have good reasons to opt out of getting this money right now.READ MORE: Spirit Airlines Issues Continue At Pittsburgh International Airport And Arnold Palmer Regional Airport
It’s part of President Joe Biden and the Democrats’ American Rescue Plan — an advance payment of the 2021 child tax credit — $300 a month for every child under 6 and $250 a month for children between the ages of 6 and 17.
Normally, you’d get this child tax credit when you file your tax return next year, but half of this money will be delivered in advance without you doing anything.
“Six months’ worth of checks to millions of families who stay with the advanced child tax credit. If you don’t want to receive that money, you can opt out,” says Raphael Tulino, a spokesperson for the IRS.
Why would parents opt out of monthly checks now? Well, some parents might prefer a lump sum next year as part of their tax refund.
But there’s another reason, says Duquesne University tax professor Bryan Menk.
“If you did get this credit based on a 2019 or 2020 return, you do need to be careful because your 2021 information may be significantly different,” says Menk.
The IRS is using tax returns from 2020 and 2019 to calculate advanced payments, but it’s this year — 2021 — that counts. So if your adjusted gross income this year exceeds the threshold, you may have to pay back some of those monthly checks.READ MORE: Longtime AFL-CIO President Richard Trumka Has Died, Sen. Chuck Schumer Says
The threshold is $75,000 for a single parent, $112,500 for the head of a household and $150,000 for a married couple.
“The government will get that money back if you are not eligible and receive that payment,” says Menk.
Other factors besides income could affect eligibility this year.
Your 17-year-old who turns 18 this year, even on New Year’s Eve, does not qualify you for any monthly checks this year, but a newborn born on Dec. 31 or earlier qualifies you for the full $3,600 child tax credit.
If you are concerned that the IRS has outdated information about your family, you can correct that information on its website, and there is also an opt-out payment function.
“If you don’t want to receive these payments and that’s OK for many, then you want to opt out sooner rather than later,” says Tulino.
Monday is the deadline to opt out to avoid getting that July check.
The IRS has several tools to update information, check out eligibility based on income and family situation this year, and opt-out of monthly checks.MORE NEWS: Pennsylvania Woman Killed By 3 Dogs She Was Watching