What to do about the "child tax credit notice" you got from the IRS.
As part of the stimulus law there was a provision added that required IRS to begin distributing the child tax credit on a monthly basis for certain taxpayers. This is nothing more than sending you a monthly check for the child tax credit you received in the past when you filed your income tax return.
Many people are confused and think this is another stimulus check (money they never got before). Here are a few things to consider:
1. If you take the child credit check now (rather than at year end) your tax refund will be reduced because you already received the money. Many people who plan on that refund will get a surprise when they file their tax return.
2. Opting out of the refund can be more work than you expected. Some people have had to give their driver’s license photos (front & back), facial ID, etc. Also note that IRS requires your spouse to do the same opt out procedure.
3. What happens if you get the tax credit and are not entitled to it because the child is no longer your dependent at year end? You get the pleasure of owing the money back to Uncle Sam after you have already spent it.
4. We also don't know how IRS is going to notify you at year end how much tax credit you already received. Be assured that if your records don't match theirs when you file your tax return, things get held up until you and IRS agree on the credit already received.
In summary, if you really need the money now---take it. If not, we suggest OPTING OUT and waiting for the money until you file taxes like you have in the past.
Here is the link to OPT OUT of the ACTC:
If you haven’t already opted out, and you are eligible for the CTC based on last year’s tax return, you should have already either received a Direct Deposit or a Check. KEEP TRACK OF THE DATE AND AMOUNT, whether you opt out or not! Delays in processing will occur if your ACTC doesn’t match what the IRS says!
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