WICHITA, Kan. (KSNW) – Advance child tax credits begin rolling into bank accounts today.
The advanced payment for the child tax credit is payments the IRS allows families to receive early, based on one-half of the child tax credit a family could file for on their 2021 taxes. The amount has increased since last year.
The credit is $3,600 annually for children under age 6 and $3,000 for children ages 6 to 17. However, six months of payments will be dispersed monthly through the end of 2021, meaning those eligible will receive $300 monthly for each child under 6 and $250 per child older than 6.
The payments do begin to phase out based on income level.
Meritrust Credit Union‘s Financial Well-Being Director Chris Wolgamott says the advance credits could be helpful for families struggling to keep up with necessities.
“It’s really important we are budgeting for these early payments coming in so we can spend them on the things we need to spend them on, spend them on our necessities and not consider the extra money right away,” Wolgamott said.
His personal recommendation is to use the funds to solidify an emergency fund, which generally means $1,000 saved per person in the family.
Families will need to decide whether to receive the money little by little over the next six months or receive one large lump sum when they file their 2021 taxes early next year.
“If you have trouble budgeting on a monthly basis, these early tax payments could potentially get spent very quickly, so a lot of families might then opt to receive that lump sum when they file their taxes,” Wolgamott said.
Visit the portal at IRS.gov to opt-out of the early payments, check your bank account information and eligibility requirements.