Parents will start receiving their child tax credits this week — but there may be a catch.
Parents who opt to receive the advance payments may likely receive a smaller tax refund this upcoming tax season. This is due to those people receiving half of the credit early.
But just because your tax refund is smaller, doesn’t mean you’re losing money.
However, one tax preparer says people should be aware that they could have to pay some of that money back.
“If your income is going to be higher in 2021 than it was in 2020, you might phase-out of this child tax credit. And if you get it early, you will have to pay it back on your 2021 tax returns. The phase-out beings at $150,000 adjusted gross income for married couples, and is probably $75,000 for single,” said Kelda Rerick, the Tax Manager of Haga Kommer Ltd.
Payments are set to roll out on the 15th of each month.
If you would like to opt-out, you can do so by the second of the month.
To opt-out, click here.