If you suspect that you could be negatively affected by your Child Tax Credit payments, remember that you can stop or change them.
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As the first round of child tax credits hit people’s bank accounts starting Thursday, many people will have additional income, and this, for some taxpayers, could be detrimental for the next tax season.
And is that the payments, which will be made on the 15th of each month from July to December, are based on the tax returns of 2020, so that people who have changes in their income from that year until now could have surprise taxes .
For example, currently, single taxpayers whose income is less than $ 75,000 per year and couples filing jointly who earn $ 150,000 or less per year qualify for the full child tax credit for each of their eligible children.
However, If your family income increases in 2021, then you could be forced to pay back some or all of your credit payments when you file 2021 taxes..
If your income stays the same or decreases, you could still be affected, especially if you have a refund every April.
Since the child tax credit is a dollar-for-dollar advance on future taxes, will likely result in refund checks with less money or surprise tax bills.
“Because these credits are prepaid, every dollar you receive will reduce the amount of the Child Tax Credit that you will claim on your 2021 tax return. This means that by accepting advance payments of the child tax credit, the amount of your refund may be reduced or the amount of tax you owe may increaseIt says on the IRS website.
For this reason, if you suspect that you could be adversely affected by your Child Tax Credit payments, remember that you can stop or change them.
Go to the IRS Child Tax Credit update portal and follow the instructions to cancel payments.
Keep in mind that there are deadlines to cancel the registration. Now, for example, it is too late to cancel the July payment. The next deadline to opt out of the money is August 2.
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