The catch with those advance child tax credit checks that might surprise parents
SALT LAKE CITY — They call it the Great Resignation — millions of Americans are changing jobs to make more money. If you are one of them, now is the time to start thinking about how that change will play out in a couple of months when you file your taxes – especially for parents who are getting monthly child tax credit checks.
Millions of Americans have been receiving an advance of the child tax credit. Rather than get it at tax time, federal officials have been dolling it out early to qualified parents.
Therein lies a catch, warn CPAs.
“The amount you get is based on either your 2019 or your 2020 filing,” said Susan Speirs, president of the Utah Association of CPAs.
The KSL Investigators asked her to weigh in on the fact that a lot of parents have changed jobs and income levels since qualifying for the child tax credit. She expects a lot of people are going to be surprised to learn that they have been receiving money for which they no longer qualify.
“If you received more of the child advance child tax credit than you should have, then you’re probably going to — you may be paying some of that back,” Speirs explained.
If you are concerned that you might owe some of that credit, the bad news is that it is too late to tell the Feds not to stop sending any more advance child tax credits this year. It is not too late to make a plan for when Uncle Sam does come calling.
“Be consciously saving for any potential tax liability,” Speirs recommended.
This could be especially problematic for gig workers or hospitality workers who saw their income dry up in 2020 because of the pandemic.
Many of them are now doing much, much better financially.