So I just I just received $550 for my 2 kids 6 & 3 , I want to know how this affects my wife and I when we file for taxes next year ? someone told me one can opt out of the payments and receive a lump sum at the end of the year, if so how much is this lump sum and lastly, are there any penalties with these payments ?
Hi DeltaOgwu,
The $550 payments are a portion of the Child Tax Credit the IRS expects you to qualify for on your 2021 tax return.
If you opt out of the payments, you would receive the amounts when you file your 2021 return.
The total amount you are eligible to receive does not change either way. It is just a question of timing whether you would prefer to receive the funds now or later.
There would not be a penalty associated with the payments. However, if you receive advance payments in excess of what you qualify for (this could happen, for example, due to a significant increase in income between 2020 and 2021), you could be required to repay a portion of the advance payments.
I hope this information is helpful. Please feel free to ask if you have any further questions!
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