A City, If You Can Keep It: Federal tax return advance program

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A Winters Express op-ed column

This is a little off topic for me but I think this is worth discussing since at least a few parents in town were confused. Plus, Crystal said she was short on space in the paper this week so a longer column on vaccines wouldn’t fit. For the eight of you who read this regularly, tune in next week for mystery, intrigue, and the unexpected. **Actual experience may vary, please read responsibly.** On July 15, Americans with children began receiving monthly payments from the IRS. What isn’t communicated clearly is that these payments will be a reduction of your 2021 tax return. The Child Tax Credit deposited into your account on the 15th of every month for the rest of the year is in essence an advance on your 2021 tax return. If you owe money after your tax return, the child tax payments may be an additional amount you owe. They are not tax free no strings checks like the stimulus payments that went out last year (no strings if we ignore the associated 5.39 percent inflation and the $ 5,736,300,000,000 federal debt increase). Whether or not this matters depends on your individual circumstances. I am not a CPA nor a Tax Accountant, and this is not financial advice. But it seems to me that if there is any chance your actual child tax credit will be less than the estimated one the IRS is paying out OR you may have to make a payment rather than receive a return for any number of reasons (over withholding on your W4, self-employed, got a raise and now make too much, etc), you might want to opt out of payments. Bottom line – If you are overpaid on the payments from the IRS for any reason, you will have to pay the difference back when you file your tax return by April 2022 either by reducing your return or writing a check. I should note that the child tax credit has been increased for 2021 only, so there is the possibility that you will get more back than you would otherwise without the increase. I would personally consult a tax preparer before accepting the payments, or simply opt out of the advance payments and take the lump sum next year. And now back to your regularly scheduled programming.

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