CHARLOTTE, N.C. — Parents, prepare for a little extra money each month.
Child tax credits will start rolling out in the next few weeks. But for some families, it may be better to turn the money down.
Child tax credit opting out
Child tax credit checks start going out July 15 and while a lot of parents may be excited about the extra cash, others may want to opt out.
Let's connect the dots.
July 15 monthly checks
The monthly checks are part of President Joe Biden's $1.9 trillion coronavirus relief package, which expanded the child tax credit for one year and made it possible to pre-pay the benefits on a monthly basis. Nearly 88% of children are set to receive the benefits without their parents needing to take any additional action.
How much you get depends on the number of children you have, their ages, and your income.
For children six and under, parents will receive $300 each month.
For kids between six and 17, the amount is $250. The program is nothing new, but President Biden's American Rescue Plan will send money straight to families who need it as an advance on their tax credit.
About 39 million households will be eligible for the monthly child tax credit, which the IRS says covers about 88% of children in the U.S.
Not stimulus tax credit advance
So why wouldn't you want the money?
Tax experts warn this is not a stimulus payment.
It is basically an advance on the increased child tax credit you can claim on your 2021 taxes.
You get half the money in these monthly checks and the other half when you file your tax return next year.
2021 change
If you don't need the money right now, you could be better off opting out of the checks and claiming the full credit on your 2021 taxes.
It would lower how much you owe. If you have a child between 6 and 17, you've been able to deduct $2,000 per child when you file taxes. Now, you'll be able to increase that to $3,000. For children under 6, it goes from $2,000 to $3,600, and you'll get the money sooner.
And if your circumstances are changing this year, you may want to opt out as well.
If you receive a major pay raise in 2021, or can no longer claim a child as a dependent, you may have to pay some of that tax credit.
To opt out of the checks, visit the IRS website.
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