Expert Interview On Child Tax Credit

Interview

EXPERT INTERVIEW: What you should look out for when getting a child tax credit

By Jimmie Johnson (Reporter), Ben Burke (Producer)

While the child tax credits set to start going out Thursday may sound like great news to parents across the country, there are a couple catches to look out for. For more on that, Jimmie Johnson sat down with Bobbi Rebell, a certified financial planner and host of the “Money Tips for Financial Grownups” podcast.

“Well, first of all, it is good news that many Americans–in fact, the majority of Americans–are going to be receiving benefits from this child tax credit,” Rebell said. “And what’s new this year is that there will be an advance, so you’ll be getting half of that before your tax return goes in.”

The second half of the credit will appear on next year’s tax return. “Many people are expecting to get these checks for $3,600 per child, that’s not going to happen,” Rebell said.

What will happen is half the money parents are expecting will be divided into six payments. “If you get direct deposit from your tax returns, [the payment] should be direct deposited into your accounts with a much smaller amount than you expect,” Rebell said.

She is also warning parents that when sending out the child tax credits, the IRS will look at their tax returns from 2019 or 2020, as opposed to forecasting 2021 returns.

“They don’t know what you’re gonna make. So there’s a possibility that you may not qualify in 2021 you’re gonna have to pay the money back,” Rebell said. “So think ahead. You may want to defer receiving it if you don’t like the idea of having to pay back the money.”

According to the IRS, parents qualify for the credit if they meet the following criteria:

  • They’ve filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return or given the IRS their information in 2020 to receive the Economic Impact Payment using the “Non-Filers: Enter Payment Info Here” tool;
  • They have a main home in the United States for more than half the year, or they filed a joint return with a spouse who has a main home in the United States for more than half the year;
  • They have a qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number;
  • They made less than certain income limits.

 

Jimmie Johnson: “There’s been a lot of talk about the advanced child tax credit. And for some people it seems to be it is free money. But you have a warning for those people who may see that way. What is it?”

Bobbi Rebell: “Well, first of all, it is good news that many Americans in fact, the majority of Americans are going to be receiving benefits from this child tax credit. And what’s new this year is that there will be in advance, so you’ll be getting half of that before your tax return goes in. And then the second half is going to be as a credit on your tax return. But many people are expected to get these checks for 30 $600 per child, that’s not going to happen, what’s gonna happen is that half of the money that you’re going to be getting, let’s say, 1800, if you have a child under six, that’s going to be divided into six payments, you’ll be getting checks for $300, that if you get direct deposit from your tax returns should be direct deposited into your accounts with a much smaller amount than you expect. The other warning I have for people is that the IRS is going to be looking at your tax returns from 2019 or 2020. Not forecasting 2021. They don’t know what you’re gonna make. So there’s a possibility that you may not qualify in 2021 you’re gonna have to pay the money back. So think ahead. You may want to defer receiving it if you don’t like the idea of having to pay back the money.”

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While the child tax credits set to start going out Thursday may sound like great news to parents across the country, there are a couple catches to look out for. For more on that, Jimmie Johnson sat down with Bobbi Rebell, a certified financial planner and host of the “Money Tips for Financial Grownups” podcast.

“Well, first of all, it is good news that many Americans–in fact, the majority of Americans–are going to be receiving benefits from this child tax credit,” Rebell said. “And what’s new this year is that there will be an advance, so you’ll be getting half of that before your tax return goes in.”

The second half of the credit will appear on next year’s tax return. “Many people are expecting to get these checks for $3,600 per child, that’s not going to happen,” Rebell said.

What will happen is half the money parents are expecting will be divided into six payments. “If you get direct deposit from your tax returns, [the payment] should be direct deposited into your accounts with a much smaller amount than you expect,” Rebell said.

She is also warning parents that when sending out the child tax credits, the IRS will look at their tax returns from 2019 or 2020, as opposed to forecasting 2021 returns.

“They don’t know what you’re gonna make. So there’s a possibility that you may not qualify in 2021 you’re gonna have to pay the money back,” Rebell said. “So think ahead. You may want to defer receiving it if you don’t like the idea of having to pay back the money.”

According to the IRS, parents qualify for the credit if they meet the following criteria:

  • They’ve filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return or given the IRS their information in 2020 to receive the Economic Impact Payment using the “Non-Filers: Enter Payment Info Here” tool;
  • They have a main home in the United States for more than half the year, or they filed a joint return with a spouse who has a main home in the United States for more than half the year;
  • They have a qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number;
  • They made less than certain income limits.

 

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