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  • child tax credits being paid today, in error?

    This probably doesn't apply to anyone on the forum, and I thought this was the case for our HH. Yet today I found that the IRS unexpectedly put $500 in our checking account. I do not understand why. First I thought it was a refund from 2020 and I simply made an error on our taxes. But then I remembered today was the first day of getting the child tax credit. Don't understand $500 though because we have 3 kids aged 2, 5, and 7. I believe you get $300 per kid 6 and under and $250 for age 7-17. So if we were to get the credit, it'd be $850. But when I filed taxes our AGI is over $300k.

    Would you call the IRS to inquire?

  • #2
    Same here. Our 2019 income would have partially qualified us, but we have an accepted 2020 turn that should have easily completely disqualified us and $667 showed up in our account this morning. I found an article that implied you have to opt out no matter what, otherwise they’ll just hit you with it on your taxes this year. There is a portal to do this, but of course it is overwhelmed right now and I can’t get in. I guess you could just keep getting them and consider it a loan from the IRS, but I’m going to opt out for the rest. Hopefully it doesn’t turn into a nightmare.

    The $667 is for 4 kids. It reduces when your income is above $150k, but below $170k so I’m inclined to believe it is being based on our 2019 return
    Last edited by MSooner; 07-15-2021, 08:47 AM.

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    • #3
      I believe the old child tax credit ($2k per kid with a phaseout starting at $400k income for MFJ) is now being paid out monthly in addition to the new increased child tax credit (up to $3600k per kid, depending on age, for income <$150k MFJ). So there are two stair-step phaseouts, one for the old credit, and one for the new one.

      So, $500/month for 3 kids would be appropriate if you are MFJ and AGI is <$400k. But, your child tax credit at the end of this year will be half of what is was last year, due to $3000 ($500/month x 6 months) of it having been paid out monthly in advance in the latter half of 2021.

      But that's just a guess. I haven't really been following this.

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      • #4
        Originally posted by ticker View Post
        I believe the old child tax credit ($2k per kid with a phaseout starting at $400k income for MFJ) is now being paid out monthly in addition to the new increased child tax credit (up to $3600k per kid, depending on age, for income <$150k MFJ). So there are two stair-step phaseouts, one for the old credit, and one for the new one.

        So, $500/month for 3 kids would be appropriate if you are MFJ and AGI is <$400k. But, your child tax credit at the end of this year will be half of what is was last year, due to $3000 ($500/month x 6 months) of it having been paid out monthly in advance in the latter half of 2021.

        But that's just a guess. I haven't really been following this.
        ah this would make sense! We do regularly qualify for the old child tax credit b/c AGI here is regularly around $350k. I hadn't heard that the monthly payments would include the old child tax credit; had only heard this would apply for the new credit. I prefer to settle at tax time just because that's what I'm used to but mathematically, it's better to get this sooner rather than later. Harry Sit suggests not opting out, and if you're married you both need to opt-out. Seems like a hassle:

        https://thefinancebuff.com/no-2021-a...t-opt-out.html

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        • #5
          I was looking at this today and the calculator included is spot on for what we got. The only thing I can think of is that we are getting the money early for our regular tax credit next year.

          I would not say no to money now vs later but seems like this will be a hassle come tax time.

          Now I got $667 extra a month to blow! That should cover the payments on my new luxury car lease right??? I can expect this money will continue indefinitely of course!


          https://www.morningbrew.com/daily/st...e=morning_brew

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          • #6
            There is talk of making this permanent so you can lease a car until your youngest turns 18 and blow all the money on yourself rather than them

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            • #7
              Originally posted by JBME View Post
              This probably doesn't apply to anyone on the forum, and I thought this was the case for our HH. Yet today I found that the IRS unexpectedly put $500 in our checking account. I do not understand why. First I thought it was a refund from 2020 and I simply made an error on our taxes. But then I remembered today was the first day of getting the child tax credit. Don't understand $500 though because we have 3 kids aged 2, 5, and 7. I believe you get $300 per kid 6 and under and $250 for age 7-17. So if we were to get the credit, it'd be $850. But when I filed taxes our AGI is over $300k.

              Would you call the IRS to inquire?
              First, you must be a martyr wanting to call IRS to inquire.

              Your AGI may be over 300K but if you are married, have deductions/credits and with 3 kids I could easily see you getting that. The child credit starts to phase out, but doesn't completely go to zero until you get to about 450K AGI.

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              • #8
                Originally posted by Marko-ER View Post

                First, you must be a martyr wanting to call IRS to inquire.

                Your AGI may be over 300K but if you are married, have deductions/credits and with 3 kids I could easily see you getting that. The child credit starts to phase out, but doesn't completely go to zero until you get to about 450K AGI.
                Lol. I think ticker got this right. The non-expanded credit starts to phase out at MFJ AGI $400k. “Fortunately” we are and forever will be under this

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                • #9
                  Well now I’m just confused. I guess we will keep it and throw it at student loans, just like all the other money the government has given us this year (stimulus checks). We literally hand it back, sometimes the same day! 😂

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                  • #10
                    Was your 2020 AGI under 400? If so they explains it. Consider it a loan from the government if your 2021 AGI will be over that

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                    • #11
                      Originally posted by Marko-ER View Post

                      First, you must be a martyr wanting to call IRS to inquire.

                      Your AGI may be over 300K but if you are married, have deductions/credits and with 3 kids I could easily see you getting that. The child credit starts to phase out, but doesn't completely go to zero until you get to about 450K AGI.
                      The “new normal” poverty level?
                      Thinking about getting SS#’s for my ESA’s pets.
                      And lobbying for an obedience school tax credit.

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                      • #12
                        Originally posted by Marko-ER View Post

                        First, you must be a martyr wanting to call IRS to inquire.

                        Your AGI may be over 300K but if you are married, have deductions/credits and with 3 kids I could easily see you getting that. The child credit starts to phase out, but doesn't completely go to zero until you get to about 450K AGI.
                        At the risk of being accused of trying to pull a spiritrider (may it never be so!), the phaseout starts at $400k AGI but, the way the law is written, you basically lose $50 in credit for every $1000 in income over that. So, you can still be getting a portion of your child tax credit with an AGI of $1million... if you have enough kids.

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                        • #13
                          Originally posted by ticker View Post
                          I believe the old child tax credit ($2k per kid with a phaseout starting at $400k income for MFJ) is now being paid out monthly in addition to the new increased child tax credit (up to $3600k per kid, depending on age, for income <$150k MFJ). So there are two stair-step phaseouts, one for the old credit, and one for the new one.

                          So, $500/month for 3 kids would be appropriate if you are MFJ and AGI is <$400k. But, your child tax credit at the end of this year will be half of what is was last year, due to $3000 ($500/month x 6 months) of it having been paid out monthly in advance in the latter half of 2021.

                          But that's just a guess. I haven't really been following this.
                          Yes, this is what is happening. Half now received in 6 monthly installments, followed by the other half come tax season.

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                          • #14
                            Originally posted by Marko-ER View Post

                            First, you must be a martyr wanting to call IRS to inquire.

                            Your AGI may be over 300K but if you are married, have deductions/credits and with 3 kids I could easily see you getting that. The child credit starts to phase out, but doesn't completely go to zero until you get to about 450K AGI.
                            Yeah definitely don't call lol. Even writing a letter, good luck!

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