Issues with the Child Tax Credit Advances

#51
#51
DancingOutlaw said:
There has to be some sort of mechanism to account for the money they've already sent you. Let's say I owe $8k total and I have $10k in child credits and I withheld $0. That would show a refund of $2k. I've already received $5k in advanced credits. I get another $2k on top of that?
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That is the issue that pj and I disagree on. I think they are going to count it as income on the 1040 and still allow the full credit because we are talking about the federal government that lives to stick their hands in your wallet. That's what I would do if I were a greedy tax writer. He thinks it is going down as prepaid credit that will essentially be the benevolent government giving YOU a free loan for a change. I just don't see that happening. And what then if they extend it into 2022? They continue the prepaid credit, and your credit claim on the 2022 tax return will drop to zero. There will be screams in April 2023 for damned sure then.
 
#53
#53
SpaceCoastVol said:
That is the issue that pj and I disagree on. I think they are going to count it as income on the 1040 because we are talking about the federal government that lives to stick their hands in your wallet. He thinks it is going down as prepaid credit that will essentially be the benevolent government giving YOU a free loan for a change. I just don't see that happening. And what then if they extend it into 2022? They continue the prepaid credit, and your credit claim on the 2022 tax return will drop to zero. There will be screams in April 2023 for damned sure then.
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I'm simply posting what the IRS has said. Disagree with them all you wish
A10. No. Advance Child Tax Credit payments are not income and will not be reported as income on your 2021 tax return. Advance Child Tax Credit payments are advance payments of your tax year 2021 Child Tax Credit.
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2021 Child Tax Credit and Advance Child Tax Credit Payments — Topic A: General Information | Internal Revenue Service.
 
#54
#54
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#55
#55
SpaceCoastVol said:
"Crumbs" is the term you meant to use I believe. I am waiting anxiously for @Ernest T. Vol to weigh in on this, but I believe it will be more significant than that based on the fact that it is moved from credit to income. Just like what they did with the ChinaFlu inspired charitable deduction. It was a $300 tax credit this year from the bottom line, but in 2021 it is a $600 income deduction. In effect, it became absolutely worthless, but they sold it as being doubled.
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For the past several years, the tax law changes are being made in real-time and are ex post facto. It is not supposed to work that way and is unconstitutional (prohibited in Article I, Section 10, Clause 1). Just this tax season in the spring, the advanced premium tax credit for Obama care was changed. Too much credit received to pay your premiums, suddenly forgiven, not taxable. Another example, unemployment compensation was suddenly deemed not taxable late in the tax filing season. This was after millions had already filed an incorrect tax return and paid the tax. The IRS is still sending out refunds for these. So, what will they do with this child care crap? No one knows because it is only mid afternoon and the tax law may change at any moment for all of tax year 2021 up until April 15th, 2022. Count on nothing except the tax code being used for political gain. I just know it cant continue on its present course. The system will collapse.
 
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#56
#56
utvolpj said:
It's a prepaid credit in 6 monthly checks. It has little effect on your taxes if income remains constant

Yes it can still be refunded if you owe no taxes
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Ok let me know where I'm losing you.

I owe $8,000 in taxes for 2021.
I am eligible to receive $10,000 in child tax credits.
I withhold no taxes from my paycheck.
On a standard 1040 I would be owed $2,000 ($8,000-10,000).
I have already received $5,000 in advanced credits.

If I also get sent a $2,000 refund this would give me $7,000 in credits when my returns shows I am owed $2,000.
 
#57
#57
hUTch2002 said:
Child tax credit portal: How to opt out with the IRS, set up direct deposit, see eligibility and more

Ok, I have multiple issues here.
1. Of course they’re setting people up to owe the IRS who have zero idea how taxes work. They just know they woke up to free money today.

2. Speaking of waking up to free money, it pisses me off that they sent a letter a month back saying it’s coming and they’ll tell us more soon but then we wake up this morning to see money from the IRS in our bank account. I guarantee they know most people won’t opt out after they get that first payment so they purposely delayed the “more info to come”.

3. And this might aggravate me more than anything, to opt out you have to make an account. To make an account you have to scan a valid driver license or passport AND do a biometric scan of your face. So if that’s required to stop getting money from the IRS why the hell can’t we do that to vote!?
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And get this - the letter had Biden's signature at the bottom. Wasn't someone complaining about Trump's name being on these letters?

This whole opt out thing for government welfare is irritating.

Yeah they are creating problems on the back end for a lot of people. It is my understanding the IRS still has not processed a lot of people's taxes that were filed this year. I filed an extension.
 
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#58
#58
DancingOutlaw said:
Ok let me know where I'm losing you.

I owe $8,000 in taxes for 2021.
I am eligible to receive $10,000 in child tax credits.
I withhold no taxes from my paycheck.
On a standard 1040 I would be owed $2,000 ($8,000-10,000).
I have already received $5,000 in advanced credits.

If I also get sent a $2,000 refund this would give me $7,000 in credits when my returns shows I am owed $2,000.
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Your math appears correct (if you have 5 kids). They raised the credit and the advanced checks don't factor in at the end of the year
 
#59
#59
utvolpj said:
Your math appears correct (if you have 5 kids). They raised the credit and the advanced checks don't factor in at the end of the year
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I have 3 kids and am eligible for $10,200 this year. Five kids would be $6-7k higher.
 
#60
#60
DancingOutlaw said:
I also agree it's moronic that you have to go through so many hoops to avoid a penalty on your tax return. But this credit was never intended for people like us, we're just getting caught up in the ****** bureaucracy of it. It does me absolutely no good to receive this credit when I just have to increase my withholding by the same amount to avoid a penalty from the government sending me an advanced credit I don't want.
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Even for people that feel like they need the money, it’s only delaying the inevitable. There will be a small percentage it will help now that will be in a better position come early next year but I’d guess many more will stupidly spend every penny not understanding what will happen next year and then be mad when they have to pay or pay more than expected. It is what it is though. Maybe it’ll lead to some people getting more educated through a hard learned lesson.
 
#61
#61
davethevol said:
This thing is going to catch so many people off guard. It looks like the best option is to just deposit the money and sit on it til taxes are due. No way am I doing biometric stuff.
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My wife asked what to do with it and I said exactly what you said, just put it aside.
 
#63
#63
hUTch2002 said:
Even for people that feel like they need the money, it’s only delaying the inevitable. There will be a small percentage it will help now that will be in a better position come early next year but I’d guess many more will stupidly spend every penny not understanding what will happen next year and then be mad when they have to pay or pay more than expected. It is what it is though. Maybe it’ll lead to some people getting more educated through a hard learned lesson.
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Again, why are they going to pay more? If they do it won't be that much
 
#67
#67
utvolpj said:
Why are people going to owe more money? There's very little difference between the tax return credit from last year to this. Unless you go over the income limits for 2021 there shouldn't be much of a change
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In the end your taxes are your taxes so it doesn’t actually increase the amount owed but a lot of people don’t understand taxes and this is an advance in your credit. For some that credit will reduce how much money the government owes them back, some will go from expecting a return to having to pay, and others will have to pay way more than anticipated. You’re right that it doesn’t change the end result but I have little faith in people to understand the impact of what will happen come next year. That’s on them though. I’m more concerned about the lack of ability to opt out up front (on purpose I’m sure) and that a valid ID and biometric scan is required to opt out when we can’t figure out how to make elections secure. It seems like the answer is right there since the IRS can require it to stop money.
 
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#68
#68
hUTch2002 said:
In the end your taxes are your taxes so it doesn’t actually increase the amount owed but a lot of people don’t understand taxes and this is an advance in your credit. For some that credit will reduce how much money the government owes them back, some will go from expecting a return to having to pay, and others will have to pay way more than anticipated. You’re right that it doesn’t change the end result but I have little faith in people to understand the impact of what will happen come next year. That’s on them though. I’m more concerned about the lack of ability to opt out up front (on purpose I’m sure) and that a valid ID and biometric scan is required to opt out when we can’t figure out how to make elections secure. It seems like the answer is right there since the IRS can require it to stop money.
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How will they have to pay if income stays constant? They increased the credit and then give that increase back in a check. There will be very little change in taxes owed

You can opt out without the biometric nonsense as I posted earlier. Unless they closed that loophole
 
#69
#69
utvolpj said:
No they're paying up to $300 per for 6 months. Basically they doubled it and are paying half in checks and half on tax return
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We got $750. 3 kids x $3,000 per kid equals $9,000. Half of that is $4,500. Divide that by 6 and you get the $750 we received.
 
#71
#71
NorthDallas40 said:
So not only are the bastards giving more credits out the SOBs are actually getting a head start on their damn wealth redistribution. Corrupt pandering assholes…
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I glanced at that document. They ARE pandering by increasing the amount. (It never made sense to me to make those who tax the system more, pay less tax.) And of course it is wealth redistribution that's what those asshats do. But pj might be correct. And actually if there is not a change to the accounting it COULD be a good thing as it infuses more play money into the system throughout time rather than all in one dump. So there could logically be some 'stimulus' in this in that cash is flowing. I actually don't have a problem with that. I still believe the day of reckoning in April is going to be eye watering when H&R Block tells people that they already got the biggest part of their refund and they might have to return all the crap they bought ahead of time.
 
#74
#74
hUTch2002 said:
We got $750. 3 kids x $3,000 per kid equals $9,000. Half of that is $4,500. Divide that by 6 and you get the $750 we received.
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$750, every month in to an S&P index fund at 8% will give you $10,145.91 in a year. The stock market is not only for rich people. As a matter of fact... nevermind.
 
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#75
#75
utvolpj said:
How will they have to pay if income stays constant? They increased the credit and then give that increase back in a check. There will be very little change in taxes owed

You can opt out without the biometric nonsense as I posted earlier. Unless they closed that loophole
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I get what you’re saying. Increase up 50% and then they pay 50% back to you but the difference should only be the difference between 50% of the higher number and 50% of the lower number. The more kids you have the greater the impact of course so I agree it won’t be a big impact for most people. The public is really weird about taxes though. Just look at what happened when Trump lowered the tax deductions from checks but then people freaked because they felt like they were getting screwed at tax time even though their net taxes paid were lower. But I understand your point and do agree the impact is minimal.

My wife went to ira.gov and then it linked her over to some ID verify site. That’s how she learned about the biometric screen and told me about it. She didn’t see an option to opt out without it but I didn’t try it myself.

Edit: lol…irs.gov
 
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