Did you receive a surprise payment from the IRS into your checking account on July 15thNo this is not a scam, and more payments are likely on the way!  Congress increased the Child Tax Credit for families as part of the coronavirus relief package this spring.  Rather than receiving the entire tax credit at the time of filing their 2021 returns, families will now receive half of their credit in monthly payments throughout the remainder of the year and the other half at the time of filing. 

According to the IRS, “Eligible families will begin receiving advance payments, either by direct deposit or check.  The payment will be up to $300 per month for each qualifying child under age 6 and up to $250 per month for each qualifying child ages 6 to 17.  The IRS will issue advance Child Tax Credit payments on July 15, August 13, September 15, October 15, November 15 and December 15.”

This credit is based on the parents’ modified adjusted gross income from 2019 and 2020 and the number and age of their children.  The full Child Tax Credit will be available for joint filers making up to $150,000 per year, after which is begins to phase out.

The IRS website includes a tool where you can check to see if you’re eligible to receive these advance payments, enrolled to receive payments, to enroll if you are not, to stop getting advance payments or to update your bank account information.  Please note that you will need to supply a picture of your ID or passport and set up dual factor authentication for security.

However, we caution clients from spending these advance Child Tax Credit payments right away.  Since these are based on 2019 and 2020 tax returns, job changes, promotions and bonuses in 2021 could phase out a higher portion of the credits which wouldn’t be reconciled until tax returns are filed next spring.  This may result in higher than usual tax bills for some families.

As always, feel free to call or email us with any questions.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only.  Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy.  It is provided with the understanding that no fiduciary relationship exists because of this report.  Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice.  PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice.  If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives.  All rights reserved.