Looking forward to a monthly check from the government??? Think fast!!!

Looking forward to a monthly check from the government??? Think fast!!!


I’ve had a number of conversations over the past few weeks with people that were talking about the direct payments they will be getting starting in July from the most recent “stimulus plan”.  For those that don’t know about this, for those that qualify, the government will be sending $250-$300 per month per child under the age of 18 living in your household, from July 2021 through the end of the calendar year.  Most people just assumed that this was another stimulus check and that they get it and that’s it, but this one is a bit different than the last few packages.

This one is an advance of your 2021 child tax credit.  For a long time the child tax credit was $1,000, then it was raised to $2,000, and just this year it was bumped up to $3,000 for children 7-18 and $3,600 for kids 6 and under, for individuals making less than $75,000 per year and couples under $150,000.  In order to get this cash into the hands of Americans sooner, they decided to distribute half of the credit over the course of the last half of the year.  So the parents of a 12 year old will receive $1,500 ($250 per month for 6 months) during the year and then can claim the remaining $1,500 on their 2021 tax return.

This is all fine and dandy, as long as you understand that if you take the monthly amount today, you will only get a tax credit of $1,500 or $1,800 (depending on the age of your child) on your taxes.  If you plan to have the tax credit help offset any taxes due, please know that it won’t all be there.  You are allowed to opt out of receiving the monthly credit; the IRS will have a portal where you can go and change your settings so that you can opt out of the monthly payment and get the full credit on your taxes.

Please know that either option is totally fine to choose, you just need to make an educated decision based on your specific financial situation.  Some people may want/need the cash today.  You could save or invest the dollars and get them in your pocket sooner, but you need to have the diligence to actually do that.  Or, you could wait and get the money back on your taxes and help ensure you owe even less to the government come tax day, or if you’re lucky, get a larger refund.

My job as a financial advisor is to educate and inform my clients about what makes the most sense for them.  Each situation is unique and it is critical to make informed decisions about your financial future.  The more informed we are, the better decisions we can make.  Feel free to reach out if you want to discuss this topic, or others, and how it can have an impact on you financially.

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