This week an important deadline passed for those who are looking to avoid taking early-advantage of a tax credit advance made possible by the American Rescue Plan.
It’s the Child Tax Credit, and was increased from $2,000 to $3,000 per child 6-17 years old. For those children under 6 it’s $3,600. It applies to all families making less than $150,000 and individuals making less than $75,000.
The change from the American Rescue Plan means that parents and guardians will be paid half of the 2021 credit in monthly payments beginning July 15. The payments will be worth $300 for some families, and slightly less for those that make more than the baseline incomes for the plan.
Here’s the deal, though: Those who wanted to opt-out of that early credit had to make that clear by June 28, 2021- a date that has now passed.
This is particularly challenging for those who’s tax situation changed between 2020 and 2021- or even 2019 and 2021. Why? For many, unemployment was a real factor last year. The IRS will base payments on 2020 income levels, which could mean that the advances on a tax credit in 2021 would need to be paid back when families file taxes next winter.
It’s unclear if the IRS will grant additional time to opt-out.
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