OT: Child Tax Credit “Payment”

[BoldStrategyTiger]

At the risk of this becoming a political thread, can someone in the know explain this Child Tax Credit payment I received today?

I don’t trust, nor do I need, money from the government. There’s always a catch.

Any tax pros on the board know anything about this?

 

[FLOtiger93]

Quick google search shows it’s basically a tax rebate for certain qualifying families with children. If you don’t need it, I’m sure I can find someone to take it off your hands.

Don’t have kids and I never get sh*t from the gubment so sorry that’s all I can tell you

 

[BoldStrategyTiger]

Quick google search shows it’s basically a tax rebate for certain qualifying families with children. If you don’t need it, I’m sure I can find someone to take it off your hands.

Don’t have kids and I never get sh*t from the gubment so sorry that’s all I can tell you

I did the Google search and read what they put out. Just don’t trust them.

Curious if any tax pros know how this impacts the tax credit at the end of the year.

 

[Lot4tailgater]

My tax man/CPA recommended we opt out so we did. His advice was, if you don’t need it opt out. From what I understand is it is taxable income.

 

[coop#]

My tax man/CPA recommended we opt out so we did. What I understand is it is taxable income.

Why would you refuse money even if its taxable? It's not like your marginal tax rate is over 100%

 

[ClemTigsCo]

About 95% of American families with children will be getting monthly tax rebate checks of $250 or $300 per child for the rest of the year (couples who make over $150,000 do not receive it, and as one of those families, I'm fine with that).

It's part of the American Rescue plan (which passed with zero Republican votes). Meant to help middle class families who struggled during the pandemic rebound a little faster.

As the previous poster mentioned, if you don't want it, I am sure there are plenty of charities who would be happy to take it off your hands.

 

[ClemTigsCo]

Why would you refuse money even if its taxable? It's not like your effective tax rate is over 100%

Seriously, you need to fire your CPA!

 

[PETiger4CU]

Is this extra money? I understood its just am advance of normal child credit you get on taxes. Just paid early instead of at tax return time.

 

[BoldStrategyTiger]

Is this extra money? I understood its just am advance of normal child credit you get on taxes. Just paid early instead of at tax return time.

I think that’s what I’m curious about. I gladly take the tax credit when I file. How will this impact that. I haven’t seen that anywhere. Probably haven’t looked enough - so I ask my fellow Tigers hoping there’s a tax pro available.

 

[Chrisd4cu]

Lol. Love the “humble” brags at the over 150k.

 

[AtomicTiger]

It's an advance on the Child Tax Credit you WOULD claim in April 2022 when you do your taxes for 2021.

You will not be able to claim this credit in April.

Silly Joe Biden....

Gonna be a lot of pissed off parents come tax time this spring, banking on that big "free interest loan" they get repaid by the gubment every year, only to find out it'd been paid to them in installments the prior six months

 

[dandeman330]

I think that’s what I’m curious about. I gladly take the tax credit when I file. How will this impact that. I haven’t seen that anywhere. Probably haven’t looked enough - so I ask my fellow Tigers hoping there’s a tax pro available.

2021 Child Tax Credit and advance Child Tax Credit payments — Topic A: General information | Internal Revenue Service

Frequently asked questions about the Advance Child Tax Credit Payments in 2021 — Topic A: General Information

www.irs.gov

Not extra money. Just getting now instead of waiting until doing taxes.

 

[CUFreeze]

Seriously, you need to fire your CPA!

If you make over 150k you are going to have to pay it all back I’m sure

 

[CU_Tiger24]

It’s an advance , This will have an effect on your taxes next year. Especially if your taxable income got higher. In my friends case he got a new job and it out him just over threshold for 2021 (these payments are based on 2020 returns) so he will owe it all back. It will reduce your tax refund or make you owe more if you already owed. It’s not like the others, this is just an advance. So instead of getting back say $5000 as “normal” you’d get back less. That’s fine for some but It may cause some with small refunds in prior years to owe this year. Or those who owed, to owe more.

 

[financeNfootball]

My issue/concern - and I’m still not straight on - is what happens if you don’t qualify (or opt out) but receive the deposit. I think you may have to pay it back on your tax return. Which is moronic if true.

I received my deposit this week and I do not qualify. I immediately opted out.

For those opting out - I believe you and your spouse have to opt out for it to take.

 

[PAWrocka]

My tax man/CPA recommended we opt out so we did. His advice was, if you don’t need it opt out. From what I understand is it is taxable income.

Yup if you make over the threshold either as a single or joint filer it will be taxed as income.

sooooooo since we are on TI and all making over the threshold with our quarter million + salaries(not including bonus) , and home run investments we ALL should be opting out.

it’s actually a good piece of legislation for those that need it

 

[CoffeeIsForClosers]

At the risk of this becoming a political thread, can someone in the know explain this Child Tax Credit payment I received today?

I don’t trust, nor do I need, money from the government. There’s always a catch.

Any tax pros on the board know anything about this?

Increase of the tax credit you receive every year on your taxes. Instead of receiving it at tax time you get monthly to assist those who need it. At least that’s how it was sold.

This is the second increase to this credit in the past few years, the last being in 2019. I believe this increase is temporary.

 

[Jam48Allay]

As a single man now with a child I'm so thankful all I have 2 do is write my ex a check every 2 weeks and not worry about such things..🙄🤣

 

[clemsonu0219]

Yay more National Debt.

 

[tiger61886]

About 95% of American families with children will be getting monthly tax rebate checks of $250 or $300 per child for the rest of the year (couples who make over $150,000 do not receive it, and as one of those families, I'm fine with that).

It's part of the American Rescue plan (which passed with zero Republican votes). Meant to help middle class families who struggled during the pandemic rebound a little faster.

As the previous poster mentioned, if you don't want it, I am sure there are plenty of charities who would be happy to take it off your hands.

View embedded media

Here’s the interesting part. My wife and I cleared that in 2020 but we got some today. I’m assuming it’s one of those phase out things?

 

[Cavitybacks]

Why would the govt give you the money if you don't qualify?

That seems next to impossible. It's a simple number on either your 2019/2020 return

Also, it's just an advance on what you were already gonna receive.

 

[i_Simp]

All Biden did was expand the welfare net.

 

[Buzzards Roost]

At the risk of this becoming a political thread, can someone in the know explain this Child Tax Credit payment I received today?

I don’t trust, nor do I need, money from the government. There’s always a catch.

Any tax pros on the board know anything about this?

It’s the credit you would normally get as part of your refund or to lower your payment. But now increased and paid monthly. I think.
If you have a child you get it even if 0 income. Supposedly it will dramatically reduce child poverty, and I see how it could in select cases. And if not spent unwisely.

 

[sundayCU]

It’s pretty basic, it is an advance on the credit you can claim when doing your 2021 taxes next year. You will essentially revive 50% of the credit in six monthly payments through the remainder of 2021. You can then still claim the other half of the credit at tax time.

It is in no way taxable if you are qualified to receive it.

The pitfall is if you make more this year than you have in years past and exceed the thresholds. Then my understanding is you would pay it back at tax time.

The credit last year was $2000 per child. This year it is $3600 for children 5 and under and $3000 for children 6-17. So if you qualify based on income and have two kids under six, you will receive $600 per month for the next six months. You will then receive a $3600 credit at tax time. So if you take the advance over the next six months, your credit when you do your 2021 taxes is $400 less than it was last year, and not a big deal IMO. Of course you can opt out and take the full credit at tax time.

 

[terrier2tiger]

As a CPA, I warn that nothing is ever free. It’s the government prepaying you the child tax credit you otherwise would claim on your 2021 tax return.

Problem(s) with this approach is that every parent was automatically opted in and opting out isn’t the most user friendly and both parents have to do it.

Also, like mentioned before there are income limitations depending on your filing status. For instance, $150k kick starts the phase out adjustment. By $400k you shouldn’t get prepaid anything. Another problem is that it’s based on your most recently filed tax return if 2020 is still outstanding so if you are in the phase out area but only starting in 2021, the tax man is going to have a bigger bill waiting on you come April 2022.

Otherwise you’re just getting what you were going to get in April 2022 sooner, but don’t count on that refund if you were planning on getting a pool or going to see the Grand Canyon.

 

[BoldStrategyTiger]

As a CPA, I warn that nothing is ever free. It’s the government prepaying you the child tax credit you otherwise would claim on your 2021 tax return.

Problem(s) with this approach is that every parent was automatically opted in and opting out isn’t the most user friendly and both parents have to do it.

Also, like mentioned before there are income limitations depending on your filing status. For instance, $150k kick starts the phase out adjustment. By $400k you shouldn’t get prepaid anything. Another problem is that it’s based on your most recently filed tax return if 2020 is still outstanding so if you are in the phase out area but only starting in 2021, the tax man is going to have a bigger bill waiting on you come April 2022.

Otherwise you’re just getting what you were going to get in April 2022 sooner, but don’t count on that refund if you were planning on getting a pool or going to see the Grand Canyon.

Thank you! This is what I was looking for. Much appreciated @terrier2tiger.

 

[Paul Strelow]

My tax man/CPA recommended we opt out so we did. His advice was, if you don’t need it opt out. From what I understand is it is taxable income.

This

 

[Nobarscanholdme]

Is this extra money? I understood its just am advance of normal child credit you get on taxes. Just paid early instead of at tax return time.

Pretty sure that's exactly what it is. Watch people get less refund b/c of this and then bitch and moan.

 

[Paw Pad]

Dems have mastered the art buying votes using tax payer money, and this country is stupid enough to keep electing them

 

[Intracoastal]

My tax man/CPA recommended we opt out so we did. His advice was, if you don’t need it opt out. From what I understand is it is taxable income.

This. If you don't need it right away you should opt out and you will still get the full amount you qualify for on your 2021 tax returns. Getting it right now can have adverse consequences.

I honesty can't fathom what the government is trying to do. There are people begging for workers. Money is flowing everywhere. No one should need an advance more now than they have in the past. The opposite really.....and the ones taking it early are going to get a smaller refund or owe more money later.

 

[HillmanTall]

This. If you don't need it right away you should opt out and you will still get the full amount you qualify for on your 2021 tax returns. Getting it right now can have adverse consequences.

I honesty can't fathom what the government is trying to do. There are people begging for workers. Money is flowing everywhere. No one should need an advance more now than they have in the past. The opposite really.....and the ones taking it early are going to get a smaller refund or owe more money later.

Here's a real world example.

My brother and sister-in-law live outside of Corpus Christi. He works construction and she is a RN at a hospital. Both full-time. They make about $90K per year.

They have one kid. Money is tight but they make it. Recently, their electricity bill has doubled to $450 per month.

They were going to have to make some tough budget decisions but now they can pay their electricity bill.

Both vote straight R and this tax credit will not change that one bit, but my brother is grateful that the Government is helping.

 

[The Orange Wave]

My tax man/CPA recommended we opt out so we did. His advice was, if you don’t need it opt out. From what I understand is it is taxable income.

Is it really taxable income? How/why does a pre paid tax credit suddenly become taxable income. Only those with an expected income over $400k will have to pay it all back.

I don’t like it because it is one step closer to UBI and conditions people to government payments, but there are also those who complain about giving the government a “free loan” all year where here you get your money back sooner.

 

[SlovenskoTiger]

It’s taxable income??? Wasn’t that the whole point of this as to be another form of stimmy for the folks that got it before? I thought since it was an expansion of what we normally get in April that it wasn’t going to be taxable? Especially if you’re under the thresholds?

 

[BionicTiger]

It's an advance on the Child Tax Credit you WOULD claim in April 2022 when you do your taxes for 2021.

You will not be able to claim this credit in April.

Silly Joe Biden....

Gonna be a lot of pissed off parents come tax time this spring, banking on that big "free interest loan" they get repaid by the gubment every year, only to find out it'd been paid to them in installments the prior six months

You will still be able to claim half of it. Just not all of it.

 

[CU_Tiger24]

Pretty sure that's exactly what it is. Watch people get less refund b/c of this and then bitch and moan.

They will

and

They certainly will

 

[grazhoppa]

As a CPA, I warn that nothing is ever free. It’s the government prepaying you the child tax credit you otherwise would claim on your 2021 tax return.

Problem(s) with this approach is that every parent was automatically opted in and opting out isn’t the most user friendly and both parents have to do it.

Also, like mentioned before there are income limitations depending on your filing status. For instance, $150k kick starts the phase out adjustment. By $400k you shouldn’t get prepaid anything. Another problem is that it’s based on your most recently filed tax return if 2020 is still outstanding so if you are in the phase out area but only starting in 2021, the tax man is going to have a bigger bill waiting on you come April 2022.

Otherwise you’re just getting what you were going to get in April 2022 sooner, but don’t count on that refund if you were planning on getting a pool or going to see the Grand Canyon.

Can you reconcile your comments with Q A10 on this page?

2021 Child Tax Credit and advance Child Tax Credit payments — Topic A: General information | Internal Revenue Service

Frequently asked questions about the Advance Child Tax Credit Payments in 2021 — Topic A: General Information

www.irs.gov

I believe you when you say you are a CPA (and I’m no expert on this), but the IRS website seems to refute what you are saying. The only adverse consequence is if you have a child whose status would change from last year.

thanks for the help. I am just trying to understand this (and not argue).

Edit: …and I am fully aware that this would decrease one’s refund if they normally get these credits. That’s different from taxable income.

 

[dandeman330]

Why would the govt give you the money if you don't qualify?

That seems next to impossible. It's a simple number on either your 2019/2020 return

Also, it's just an advance on what you were already gonna receive.

They are giving based on 2020 tax return. Qualification will be based on 2021 tax return. They don’t know your 2021 income yet. Those exceed the income limit in 2021 will have to pay it back.

 

[dpotter24]

This. If you don't need it right away you should opt out and you will still get the full amount you qualify for on your 2021 tax returns. Getting it right now can have adverse consequences.

I honesty can't fathom what the government is trying to do. There are people begging for workers. Money is flowing everywhere. No one should need an advance more now than they have in the past. The opposite really.....and the ones taking it early are going to get a smaller refund or owe more money later.

Exactly! This proves yet again the left couldn't give a rats ass about small businesses. And yep, all these people who don't understand will be bitching and whining when they file their taxes that they didn't get as much back without understanding they were advanced half of it already.

 

[gooddogjudge]

Here's a real world example.

My brother and sister-in-law live outside of Corpus Christi. He works construction and she is a RN at a hospital. Both full-time. They make about $90K per year.

They have one kid. Money is tight but they make it. Recently, their electricity bill has doubled to $450 per month.

They were going to have to make some tough budget decisions but now they can pay their electricity bill.

Both vote straight R and this tax credit will not change that one bit, but my brother is grateful that the Government is helping.

I think I can teach your brother how to live very comfortably on a combined $90k without having to make tough budget decisions.

 

[VTiger15]

Lol. Love the “humble” brags at the over 150k.

Based on my many years of reading this board, if you make less than $150K, you are the 5% on TI.