ROANOKE, Va. (WFXR) — Starting July 15, parents of children ages 17 and younger will begin receiving monthly payments from the Internal Revenue Service (IRS).
The payments are part of the child tax credit that parents receive every year, but this year, the federal government decided to give parents some of that money sooner. It’s one of several changes made due to the coronavirus pandemic.
“What they’ve done this year is they’ve increased the amount, so it’s from $2,000 to $3,000, and then they’ve increased the age limit,” tax expert David Kembel explained. “In the past, when a kid turns 17, you don’t get the credit anymore. Now you still do. You get it as long as the kid is under 18, and then finally, rather than $3,000, if your child is under 6 – so 5 and below – they’re going to make it $3,600.”
Parents are eligible to receive $250 per month for each child ages 7 to 17, and $300 per month for each child younger than 7 years old. The payments will be made in the months of July, August, September, October, November, and December. The sum will be exactly half of the full amount of the tax credit granted to parents with dependent children.
The catch, according to Kembel, is parents who choose to receive the payments will more than likely get a smaller refund this upcoming tax season. This is due to those people receiving half of the credit early. He suggests parents who don’t need the money to make ends meet opt out of the payments.
Kembel says there are potential problems with accepting the early payments.
“For instance, people change bank accounts, or the bank account people use wasn’t right to begin with, and so the new one is not going to work either,” Kembel said. “Or if people move, the IRS letters will not be forwarded by the post office. Post offices do not forward government checks so those are going to get sent back to the IRS.”
Additionally, it could cause a problem for divorced couples who alternate claiming their child. The early monthly payments are based on 2020 tax information. Therefore, the money will go to whichever parent claimed the child in 2020 and not the parent who will claim the child in 2021. If the incorrect parent receives the extra money, that person will likely have to pay it back.
To manage your advance payments, visit www.irs.gov. Kembel says the IRS is constantly updating the website to allow parents to do more.
“It seems about every month they’re adding adding a better feature, so they’re going to let you change the direct deposit information in case it’s wrong,” he said. “They’re going to let you change your address in case it’s wrong. They’re going to let you change which kid you want to claim.”
Payments are scheduled to roll out on the 15th day of each month. If a parent wants to opt-out, Kembel told WFXR News they should do so by the second day of the month. It’s unclear if a parent is able to opt-out one month and then opt-in the next. Kembel says parents should keep a close eye on the IRS website.