Child tax credit now could limit refund in the spring :: WRAL.com
A heads up for parents with children aged 17 or younger: That tax credit the government sent might need to be paid back.
Parents with children in high school and younger probably received a payment last month from the IRS. Those payments will continue monthly through the end of the year as part of the American Recovery Act.
Parents get half of the year’s child tax credit as a monthly advance.
But Raleigh CPA Toni Rocker cautions, “I think a lot of people are going to be surprised by this. They’re going to maybe have to pay this money back.”
Rocker is so concerned, she sent an alert letter to her clients about the financial impact on next year’s tax filings.
She says families who typically get a refund could see less in 2022 because of the credit.
Those who typically owe on their taxes will likely owe more.
Families can “unenroll” from the child tax credit online, but Rocker notes, it takes patience. “It’s a little bit of a pain,” she says.
5 On Your Side stepped through the process, and we agree!
First, parents mut upload your driver’s license and go through a face recognition process. It took four tries for the video to officially match the license and be accepted.
Then, you must add your phone and Social Security numbers and verify them through your phone.
While the checks and balances are necessary, as Rocker cautioned, 5 On Your Side found it takes time and patience to get to the point where you actually un-enroll from payments.
Also worth noting, each parent must go through the process individually. If only one person un-enrolls, it only impacts half the expected advance.
There is a deadline each month to unenroll for the next payment. The next opt-out deadline is Aug. 30 to stop payments from coming in September, October, November and December.
Rocker suggests some parents might want to just hold onto the money and pay it at tax time if necessary.
For divorced parents, especially those who claim children in alternate tax years, tax experts say 2021 is not your year.
After a year of stimulus checks, and the $335 dollar grants sent to parents, Rocker feels this tax credit is something to be aware of. “That way you’re just not surprised. If you have to pay some back, you’ll know if your refund will be less, at least you’ll know now,” she says. “I know a lot of people don’t like tax surprises.”