Financial Model Blog

Bonus Money | Child Tax Credit | Confusion


Take now or forever hold your piece


By now those of you who are reading this have received at least one advance payment of the child tax credit. That's great, or is it? There was some confusion on this among friends, family, and clients and we hope to get some clarity on this for you.


If you're eligible to claim the child tax credit you would have received a letter from the white house outlining both an enhancement to the amount and the way it's being paid this year. For the remainder of 2021, the IRS has auto-enrolled everyone eligible into an advanced payment of up to half of the eligible amount. There's really no right or wrong way to do this, but I think it's more important to dive into the details to truly understand what this money is and what it's not.


First off, this is NOT a monthly "Bonus" check as some were referring it to. It is not itself any more than you're actually entitled to so don't get too excited. One thing to note is that the credit has changed from the tax year 2020 to 2021 so the amount of the credit overall should be worth more depending on your household, tax filing, and situation. According to, the credit was increased by $1,000 for each child over the age of six and $1,600 for each child six and under. They also went on to expand the age limit from 16 to 17. These changes were a part of the American Rescue Plan and many families will appreciate the additional help.


We mentioned that everyone was auto-enrolled in the advanced payment, but what if you prefer getting them at the end of the year when filing your returns? Well, that will require a little bit of elbow grease. You'll want to visit the website and click on the blue "Manage Payments" button. Here is where you can elect against receiving your advance payment of half of your eligible child tax credit.


Now, if you're married, there's one more step. You'll need to also do the same for your spouse. If you fail to take this step, you'll continue to receive a quarter of the credit unless you do the same for your spouse. Here's the tricky part, if your spouse doesn't already have an account with the IRS (the case with my family) you'll find yourself creating an account with which is a bit detailed. It requires a scan of the front and back of their driver's license, a video and picture as well as email verification and a slew of typical profile questions like date of birth, social security #, etc. Below is a screenshot of the first step to getting you started in requested to opt-out of the monthly checks for the rest of the year.


So who cares if you get paid monthly or at the end of the year? Great questions - there's no difference in the amount. The concern I see is the families that depend on or expect that huge refund check at the end of the year. When the first checks were mailed out in July, some people thought this was an added benefit or "bonus" check. Like a "Christmas in July" type of deal. The people who I can invasion being disappointed or left with the short end of the stick are those who didn't quite understand what the checks were for. At the end of the year when their refund is much smaller or they potentially owe money, they'll be in for a rude awakening and the money will already be gone.


All things considered, this shouldn't be much of an event given a few things that are happening:


  1. Advanced payments are for half the credit

  2. Child Tax Credit has increased

  3. The eligible age has increased

  4. You have the option to opt-op


All in all the monthly checks are probably a good thing for most families. It's not a life-changing event by any means and it would be something realized at tax time anyway. More money in the pockets of American families throughout the rest of the year might be a good way to buffer additional impacts on jobs, the economy, and a number of other economic dilemma's were currently dealing with. With that being said, my only gripe is the way it was rolled out. Perhaps a request to enroll versus an auto-enrollment would have been better; considering the hoops to jump through to request the checks to stop.


Advanced payments are one topic we discuss on our latest #PennyWiseFinancial #Podcast. Take a listen below.



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