Sponsored - More than 36 million U.S. households may have a little extra money in their accounts as the IRS began sending the first round of Advance Child Tax Credit payments to qualifying families on July 15. Advance Child Tax Credit payments are early payments of the estimated total credit you may claim on your annual tax return. Families will receive up to 50 percent of the estimated amount and payments will be disbursed by the IRS monthly through December 2021.
Any time you receive unexpected income, it can be tempting to spend it right away. Instead, you may want to consider alternative ways to use extra income to address other financial goals or needs.
- Deposit payments into a savings account to use for childcare expenses or back to school supplies. With school starting soon, a little extra income can help pay for upcoming childcare expenses – school supplies, uniforms, daycare fees, and much more. Setting this money aside in a savings account now may provide some financial relief later.
- Contribute to your child’s financial future by opening a savings account, such as a First Commerce Sammy Squirrel Kid’s Savings Account. At First Commerce, we make squirreling away money fun by rewarding your child with Acoins – wooden nickels that can be redeemed for gift cards or money deposited into their account! Sammy Squirrel teaches kids smart money habits and helps them save.
- Create emergency savings. Emergencies can happen that require you to spend money outside of regular expenses, which can affect your financial stability. Commit to building up emergency savings over time. Put a small portion into savings set aside only for use in emergencies. Nearly two thirds of Americans don’t have money saved to cover emergency expenses such as an Emergency Room visit.
- Talk with a CPA or financial advisor to understand how these advance payments may affect your tax filing status for the year. The IRS used your most recent tax return to determine your payment, but there’s plenty that could change between tax seasons. For instance, you may have received a pay increase or one of your dependents is no longer eligible. Multiple factors can affect the amount you receive. It may be helpful to speak with an expert for details specific to your situation.
- Know the facts. The IRS has published Frequently Asked Questions on their web site to answer a variety of questions including, “How do I qualify for Advance Child Tax Credit Payments?” and “What do I do if I think the amount of my Advance Child Tax Credit is incorrect?” Taxpayers can also use the IRS website to manage payments, opt out of payments, submit information as a non-filer, and check eligibility.
Beware of Scams Related to Child Tax Credit Payments
Be on the lookout for scam artists trying to use Advance Child Tax Credit payments as a way to steal personal information and money.
- The IRS will not initiate contact by email, text messages, or social media channels to request your personal or financial information.
- Watch out for emails with attachments or links claiming to have special information about Advance Child Tax Credit payments or refunds of the Child Tax Credit. These emails could contain viruses or malware.
- First Commerce will never contact you via phone, text, or email requesting personal information. Do not reply to text or email messages requesting personal information including your Social Security Number, credit or debit card numbers, or username and password.
For more smart money management tips, visit FCCUFoundation.org.
You can also view previous segments of Money Minute on the First Commerce web site at FirstCommerceCU.org/MoneyMinute.
Insured by NCUA. First Commerce does not provide tax, legal or accounting advice. The information on this page is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your tax, legal or accounting advisor for further guidance.