Parents could get more money with expanded tax credits

WILMINGTON, NC (WWAY) — Parents, don’t be surprised if you start getting payments in the mail.

The new American Rescue Plan Act is expanding child tax credits for those who make less than:

• $150,000 a year filing jointly as a married couple
• $112,500 a year filing as head of household
• $75,000 for single tax payers

With the pandemic affecting a lot of people’s finances advanced payments could help locals catch up on bills. But if they aren’t aware of the new policy, people could be in for an unpleasant surprise next tax season.

Parents receiving child tax credits could get up to $1,600 more per child this year. As the IRS expands tax credits to help families after the pandemic.

“I think it’s a good idea that we help support each other at this time,” said one parent at Long Leaf Park.

Some families are wondering if they should sign up for monthly credits from July through December.

“I think it will be good for kids when they’re going back to school,” said dad, Daryl Blackwell. “You can get bookbags and stuff like that.”

You could also opt out and get one lump sum come tax time.

“Probably just put it into our savings and figure out and save it for a rainy day after just buying a house,” another father pushing his daughter on a swing said about his tax credit plans.

With the change comes new question. The main one seems to be whether or not to opt out of monthly payments. According the CPA David Lewis, that should depend on your family’s financial situation.

“It’s going to be roughly 50-50,” Lewis explained, “because some folks have that money saved as part of their refund for perhaps vacations or a large purchase next year. And others would rather have the money now, they can definitely use the money now.”

Another common question is whether the total sum will remain the same if you do choose to opt out.

According to Lewis, “Think about it as an advanced payment on a credit that you would have received anyway. So you’re not going to receive any less by receiving it now versus opting out.”

Parents could receive up to $3,000 for kids 6-17 and $3,600 for those younger than 6.

Though there isn’t a way to opt out of monthly payments yet, Lewis recommends taking this time to look at your finances, and plan ahead instead of relying on the usual sum.

“The IRS said by the end of June they will have how to basically opt out of the program so that you won’t get the advance payment, it will just be a part of your 2021 return.”