NewsLocal News

Actions

Advanced child tax credit not the best option for some families

Posted at 10:22 PM, Jul 19, 2021
and last updated 2021-07-19 23:22:48-04

OMAHA, Neb. (KMTV) — Over the past 18 months, the cost of getting your child diapers, keeping them fed, and bringing them to daycare has been on the rise.

Elisabeth Everett with First Five Nebraska says with some parents still working to get ahead after the pandemic or facing new expenses as they head back to work, the advanced child tax credit will be a help for some families.

“For a lot of those parents who either don’t have a job or are struggling financially to make child care needs met, this is a huge increase for them," said Everett.

Some parents may even be able to offer their kids things beyond the basics with the automatic, extra $250-$300 per month.

Chris Tointon, CEO of the YMCA of Greater Omaha, says they did see a drop off in parents using their summer programs and childcare services at the beginning of the pandemic. But as parents head back to work, they're expecting more kids to be coming back and the extra income could give parents some breathing room.

"Just having some extra money right now for people is going to give them that extra window to maybe be able to try something beyond child care, to maybe be able to get their kids involved in community activities," Tointon said.

But for other families, opting out of the tax credit may be better. Mike Feekan with First Five Nebraska says it's important for families to remember that the extra money is an advance on the yearly tax return they’ll get next spring.

“I do think that people are not going to realize that and that they think that this is money coming from the government as a stimulus fund type of payment and not realizing this is really truly a part of their existing tax return," Feekan said.

Tax experts add that for those who share custody, the advanced payments may have one parent actually owing money come tax time.

“If you claim the child on your 2020 tax return, but for instance, you don’t get to claim them, the other parent does, in 2021, you’re going to receive that advance, but it’s going to get reconciled," said Chad Brown, a certified public accountant, and owner of a Liberty Tax in Omaha.

The best course of action is to talk to a tax expert about your specific financial situation.

“Just like anything, certainty cures things," Brown said. "So whether it's good or bad at least you know and you’re not surprised at the end of the day.”

Tax experts say to keep in mind that these automatic payments are for parents who claimed a child on their 2019 or 2020 taxes; parents of children born in 2021 will need to report the dependent to the IRS to receive the payments.

You can opt-out of payments on the IRS's website.

Download our apps today for all of our latest coverage.

Get the latest news and weather delivered straight to your inbox.