As part of the American Rescue Plan, which passed in March, a new child tax credit was brought into place, and the first payments from that credit will begin going out to American families in mid-July. More than thirty-six million Americans are eligible for the credit, and the IRS has letters going out this week explaining how the credit works, with a second letter expected to arrive immediately prior to the arrival of the payments. 

The first payments will arrive July 15, with more on the fifteenth of the subsequent months. 

But some are advising that there are reasons some Americans could choose to opt-out of receiving that tax credit. 

NJ.com recently laid out some reasons why. 

There are some taxpayers whose eligibility has changed in 2021, due to making more money, and they will have to pay back any overpayments on next year’s taxes, one expert told the site. 

“Let’s assume when you file your 2021 tax return, your adjusted gross income turns out to be higher than 2020 and you’re only eligible for a child tax credit of $1,000,” tax expert Gail Rosen told NJ.com. “Then you would be required to pay back $2,600 with your 2021 tax return—$3,600 received in advance, less the $1,000 child tax credit, which would equal $2,600 due back to the IRS.”

While the previous stimulus check payments were still in effect if the IRS sent payments based on their 2019 incomes and their income went up the following year, they were not required to pay the money back, but with the child tax credit payments, they will be required to do so. 

“If you know your income will rise substantially in 2021, potentially making you ineligible for the credit, or only eligible for a smaller credit, you may want to opt out of getting the advance payments,” NJ.com says of the payments. 

In addition to the child tax credit that passed this year, President Joe Biden has proposed, as part of his American Families Plan, to extend the expanded child tax credit to 2025. Another proposal in Congress, by Ways and Means Committee Chairman Richard Neal, would make the child tax credit permanent.

One tax expert quoted by NJ.com was somewhat skeptical of that happening, however. 

“I do not anticipate the expanded 2021 credit being made permanent given the lack of cooperation between the Democrats and the Republicans in Congress on various matters,” local CPA Neil Becourtney told the publication. “I view it as a short-term measure to help the lower-income and middle-class population recover from the financial impacts of the pandemic.”

Stephen Silver, a technology writer for the National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters