At what combined income should people have opted out?
Our income has increased a lot as of late as i have returned to work full time since being SAHM. We got the payment today but I think I likely need to opt out.
PDQ
Deleted.
The phase out starts at $150k for a couple, so I figured there was no way we were eligible. I think I'm going to park it in savings until we do our taxes next year because I really have no idea what to expect.
Post by gretchenindisguise on Jul 15, 2021 22:13:54 GMT -5
I signed A up for a new camp that was nearly the whole payment we received.
Also - I don’t know why so many are thinking they’ll need to pay it back (other than separated parents dealing with splitting credits with another parent) - it starts going down after a combined income of $150,000 but doesn’t stop until $400,000, right? Do y’all know something I don’t? Or are we just ml/cep poor?
I signed A up for a new camp that was nearly the whole payment we received.
Also - I don’t know why so many are thinking they’ll need to pay it back (other than separated parents dealing with splitting credits with another parent) - it starts going down after a combined income of $150,000 but doesn’t stop until $400,000, right? Do y’all know something I don’t? Or are we just ml/cep poor?
This article below explains why some people have decided to opt out and/or think they'll have to pay it back. I don't have kids nor am I married, but if my partner and I were married and had a child we'd probably fall in to this bucket because in 2020 he really didn't make any money and in 1 month in 2021 he made almost more than he made the entire year of 2020 due to covid (plus I switched jobs so went from making under 6 figures well in to over 6 figures.). So we'd def qualify for the child credit based on 2020 numbers but likely nothing or a very reduced amount based on 2021 AGI.
I signed A up for a new camp that was nearly the whole payment we received.
Also - I don’t know why so many are thinking they’ll need to pay it back (other than separated parents dealing with splitting credits with another parent) - it starts going down after a combined income of $150,000 but doesn’t stop until $400,000, right? Do y’all know something I don’t? Or are we just ml/cep poor?
This article below explains why some people have decided to opt out and/or think they'll have to pay it back. I don't have kids nor am I married, but if my partner and I were married and had a child we'd probably fall in to this bucket because in 2020 he really didn't make any money and in 1 month in 2021 he made almost more than he made the entire year of 2020 due to covid (plus I switched jobs so went from making under 6 figures well in to over 6 figures.). So we'd def qualify for the child credit based on 2020 numbers but likely nothing or a very reduced amount based on 2021 AGI.
Yeah, I get that. And for some people, yourself included (I’m so happy things are going well!!) there has been a big jump. But most people are somewhat stable.
From the article it says,
“ Rosen says: “But 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.”
“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.”
I’m curious what the income increase would have to be to drop the credit from $3600 to $1000. Given the large phase out (150k to 400k for a married couple or $200k for a single filer)- it seems like it would take a large bump to drop it that substantially.
I need someone to make an excel spreadsheet to calculate it lol.
I also just read the the monthly installments are also only 50% of the credit owed. So no one is actually getting the full $3600 between july and december. The most they would get would be $1800. So using that quoted example above, even if a person’s income jumped so much between the years they’d only have been overpaid by $800, which is much more palatable than $2600. www.cnn.com/2021/07/14/politics/child-tax-credit-payments-explainer/index.html
We didn’t get any despite the calculators telling me we’d get about half with the income phaseouts. The site says no payments are pending. What the heck?!
It says the same for us but we qualify for the full amount. I had been hoping to take up to a pleasant surprise in our account but no such luck!
I signed A up for a new camp that was nearly the whole payment we received.
Also - I don’t know why so many are thinking they’ll need to pay it back (other than separated parents dealing with splitting credits with another parent) - it starts going down after a combined income of $150,000 but doesn’t stop until $400,000, right? Do y’all know something I don’t? Or are we just ml/cep poor?
Personally, I’m not worried that we won’t qualify for the credit, but I’m not sure our withholdings are correct. Our AGI more than doubled in 2020 (DH went from military in 2017, to under/unemployed in 2018-2019, to working full-time in 2020) and we owed several thousand dollars after years of getting large refunds. After I filed our 2020 return, I used the IRS withholding calculator to figure out how much extra to have withheld from our paychecks to end up even when we file for 2021. It’s not clear to me whether the calculator took the advanced payments into account or not, so I am setting aside the money until we file 2021 taxes to make sure we don’t owe. A refundable tax credit reduces your tax liability, but isn’t that same as a stimulus payment for those under a certain income.
I signed A up for a new camp that was nearly the whole payment we received.
Also - I don’t know why so many are thinking they’ll need to pay it back (other than separated parents dealing with splitting credits with another parent) - it starts going down after a combined income of $150,000 but doesn’t stop until $400,000, right? Do y’all know something I don’t? Or are we just ml/cep poor?
I think for many it's not that they will specifically pay back the credit, it's that they usually owe at tax time even with the full credit factored in. Most higher dual income wage earners have a tendency to under withhold because of how the tax tables were set up. A family at $250k income qualifies for the same $2000 per kid they did last year. I do think there are some on here that are over 400k and don't qualify at all in 2021.
In previous years when I was married, I had my withholding almost exactly where it needed to be. In my last 3 years of filing married my refunds or owed amount were under $100. So any advance would have been repaid at tax time even though I still fully qualified for the credit. Most moderate income taxpayers overwithhold, and low income filers usually overwithhold plus get refundable credits like the earned income credit, these folks get refunds. So their refunds will just be smaller at tax time.
This advance's purpose is really for those people who usually receive large refunds of refundable credits. Get their money into their hands now when they need it rather than have to wait for a large lump sum.
I have no idea what tax time will look like, but even if we go up, it’s only half the estimate being sent now. We do max retirement and have upped cash donations, but otherwise, DH’s OT is unpredictable.
Post by mccallister84 on Jul 16, 2021 6:49:44 GMT -5
We got ours, because after I saw what was required to opt out I just figured we’d take it and figure it out later. For us, H got a retention bonus three years ago that vests on 12/31 this year but doesn’t distribute until 2/2022. We don’t know what that means for us tax wise, but it should push our AGI over $150,000. I know it’s not the most MM way but we usually get large refunds and we like that “forced” savings. We figure this year our refund just won’t be that high - we still don’t think we owe but we really have zero clue with this bonus coming in.
I’m not ashamed to say we got it and we’ll use every bit of it. The only place I’ve seen people talking about opting out is here and to me this place is not a good spectrum of real life (so many people here have more than 1 bathroom which in my head means you’re not poor 😂).
We did not opt out. We weren't too excited about all the personal info that they needed to verify our identities - which I get why that is needed. But also, no.
We're putting the reduced amount aside in case we owe during tax time. And if we don't, we will put it in her 529.
lilafowler, Same. I got super worried about opting out after reading all the threads here, then realized that I'm well within the income limits as a single, head of household filer. I'm very happy to use this money to cover all the kid expenses that I have to pay for that exH doesn't help with.
I’m not ashamed to say we got it and we’ll use every bit of it. The only place I’ve seen people talking about opting out is here and to me this place is not a good spectrum of real life (so many people here have more than 1 bathroom which in my head means you’re not poor 😂).
The handful of people who have talked with me about the credit have plans for the money or plan to opt out. No one I know is saving it. My friend is using her first check for car repairs that’s she has been putting off. So yes, this not the norm for most who are getting the credit
Ours hit yesterday morning at the same time as they hospital cashed my check for an unexpected bill still trickling in from my son's birth 8 months ago (stupid out-of-network anesthesiologist!) They were within $30 of each other, so in my brain, this one covered that. The remaining ones are earmarked to help finish paying off my husband's biggest student loan, which we've been attacking during the no interest period. Paying that off drops the monthly payment considerably and puts us in a decent position when interest kicks back in again (the monthly interest has decreased by a third!) Part of me feels guilty, like I should put it in his designated account, but the sooner these buggers are paid off, the sooner we can save for his future more concertedly.
I’m not ashamed to say we got it and we’ll use every bit of it. The only place I’ve seen people talking about opting out is here and to me this place is not a good spectrum of real life (so many people here have more than 1 bathroom which in my head means you’re not poor 😂).
The circumstances that would make opting out make sense are pretty uncommon. Figures that among people on this board (myself included to be fair, although we are nowhere close to the phase out) incomes have gone up during the pandemic. That is, uh, NOT the case for most people who qualify for this credit.
We got it and are using it toward our eventual down payment in the more expensive area we want to be in for DS2’s special education needs. We currently rent here but would like to buy when the market is more stable since we will be here for at least 11 years (when he graduates).
I’m not ashamed to say we got it and we’ll use every bit of it. The only place I’ve seen people talking about opting out is here and to me this place is not a good spectrum of real life (so many people here have more than 1 bathroom which in my head means you’re not poor 😂).
I know of one person outside of the boards who is an accountant who got fucked by taxes last year due to husband's unemployment and other special circumstances. She is not GBCN rich, but is worried about her tax bill again this year and so is opting out.
We didn’t get any despite the calculators telling me we’d get about half with the income phaseouts. The site says no payments are pending. What the heck?!
We didn’t get any, either, even though we should be qualified. We even got a letter from the IRS back in June saying that we qualify and telling us to keep an eye out for instructions in case we want to opt out (which we did not do, because we expect to qualify for 2021). Booooooo.
check the IR/ website. I got both stimulus payments via direct deposit but I’m getting the child care credit via mail/debit card.
We didn’t get any, either, even though we should be qualified. We even got a letter from the IRS back in June saying that we qualify and telling us to keep an eye out for instructions in case we want to opt out (which we did not do, because we expect to qualify for 2021). Booooooo.
check the IR/ website. I got both stimulus payments via direct deposit but I’m getting the child care credit via mail/debit card.
Same here. Direct deposit for stimulus and the IRS pulled my 2020 tax payment from my account, but mail for this.
We opted out of this, not because we couldn't use the money monthly, but because our income is so weird this year compared to LY.
H is in an industry that did well during the pandemic and he got bonuses last year that will not be repeated. Our 2021 income will be significantly lower and the AGI when we file will be so different from the 2020 AGI they would use to calculate our credit. So we decided to just opt out and then if we get the credit in the form of a refund next year it can go to savings/529s/etc then.
I’m not ashamed to say we got it and we’ll use every bit of it. The only place I’ve seen people talking about opting out is here and to me this place is not a good spectrum of real life (so many people here have more than 1 bathroom which in my head means you’re not poor 😂).
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We opted out, because we will have a new baby later this year, and I don’t want to have to figure out paperwork to get it adjusted at tax time.
We got it and plan to add it to our kids college funds for now. We still haven’t filed for this year (I knowwwww we got an extension though) so I’ll talk to my tax guy next month to see what he thinks we should do.
We did not opt out. We weren't too excited about all the personal info that they needed to verify our identities - which I get why that is needed. But also, no.
We're putting the reduced amount aside in case we owe during tax time. And if we don't, we will put it in her 529.