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Some 39 million American families on July 15 will get the first of six advance monthly payments of the enhanced federal child tax credit.
However, some of those families should elect to not receive the monthly payments, say financial experts, and instead wait to claim the entire credit when they file their 2021 taxes next year.
“It’s important to allow that ability to opt out of these payments because we don’t know how people have budgeted their tax refunds,” said Elaine Maag, a principal research associate at the Urban-Brookings Tax Policy Center. “And so if it’s important to them that they receive this credit as one lump sum payment, we want to make sure people still have that option.”
If a family has not yet unenrolled for the advance monthly payments, they will, in fact, receive one through direct deposit or by paper check this month, as the last day to update the preference for the July disbursement was June 28. However, families can still tell the IRS not to send the payments going forward, meaning they won’t get the money for the remaining five months through the end of the year.
A credit against money owed
Families who tend to owe money to the IRS when they file their taxes may want to use the full credit next year, as opposed to getting half of it in advance, because the benefit offsets…