Debt Dumpers 2021

[jen7233]

Are you a daily Clear Value watcher also? Lol. He's great!

Lol yes! Reads the news topic, flips down the paper, done! I liked listening on the the news snippets over the stimulus bill debates which has gone on, and on, and finally wrapping up. I wish most news of any topic was read it and move on!

 

[TEM1234]

So, I've decided I'm going to "hack" the new child tax credit situation once the law passes. It seems the IRS will be setting up a portal where you can go to enter your filing status, number of qualifying kids, and taxable income from your last tax return. There will also be an option to "opt out" of direct payments.

They are going to do this tax credit in kind of a weird way, so pay attention:

The previous credit was $2,000 per child up through age 16. The new credit will be $3,000 per child up through age 18. It will be $3,600 for kids age six and under.

They plan to give people part of the total credit amount in the form of direct payments, beginning in July. They propose to send either $300 or $320 payments, depending on age of child. So, you will get either $1800 or $1920 per child, leaving a credit when you file NEXT year of $1200 or $1680 per child.

The part where this becomes problematic is that they will NOT be updating W4s or the way tax withholding is calculated. So, your pay will continue to withhold expecting a credit of $2000 per child. People who opt into the monthly payments will find themselves owing additional taxes at tax time, due to the actual credit applied being less than $2000.

Now, I'm not sure why this was overlooked, but I am going to do the following:

1. Opt OUT of direct payments
2. Adjust withholding on the W4 to withhold as though I have THREE children instead of 2. This way, they will withhold based on a total child tax credit of $6000 vs $4000, since that is the new amount my 2 kids will qualify me for. If I do this NOW, I start seeing more money in our paycheck NOW rather than having to wait until July. Plus, I have no surprise at tax time, because since I didn't take direct payments, I will have the full $6,000 credit applied to my taxes.

Now, I'm not a finance person, but this seems to be a workable plan. Does anyone see a glaringly obvious thing I might be overlooking?

The only question I have is the fact that it is now fully refundable. Im pretty sure it was not fully refundable in the past. If I recall correctly, we have never been able to deduct the full amount, so have never benefited from the full amount (in our case $8000- 4 kids). I think you are correct as long as you were previously able to deduct the full amount. I think for us Even taking the half payments we will still have a bigger credit at tax time.

 

[DLgal]

The only question I have is the fact that it is now fully refundable. Im pretty sure it was not fully refundable in the past. If I recall correctly, we have never been able to deduct the full amount, so have never benefited from the full amount (in our case $8000- 4 kids). I think you are correct as long as you were previously able to deduct the full amount. I think for us Even taking the half payments we will still have a bigger credit at tax time.

We have always gotten the full amounts.

 

[jen7233]

Now, I'm not sure why this was overlooked, but I am going to do the following:

1. Opt OUT of direct payments
2. Adjust withholding on the W4 to withhold as though I have THREE children instead of 2. This way, they will withhold based on a total child tax credit of $6000 vs $4000, since that is the new amount my 2 kids will qualify me for. If I do this NOW, I start seeing more money in our paycheck NOW rather than having to wait until July. Plus, I have no surprise at tax time, because since I didn't take direct payments, I will have the full $6,000 credit applied to my taxes.

Now, I'm not a finance person, but this seems to be a workable plan. Does anyone see a glaringly obvious thing I might be overlooking?

Other than knowing of the child tax credit potentially increasing here, I'm quite honestly not sure. They're still shaking things out on that, apparently adding a "benefits distributor" role in their plans. I'd maybe wait for them to put out some more information on this. I'm not sure how to run scenario numbers on it yet. But, I can kind of see what you're saying.

 

[DLgal]

Other than knowing of the child tax credit potentially increasing here, I'm quite honestly not sure. They're still shaking things out on that, apparently adding a "benefits distributor" role in their plans. I'd maybe wait for them to put out some more information on this. I'm not sure how to run scenario numbers on it yet. But, I can kind of see what you're saying.

They are adding a benefits distributor because they anticipate continuing this child tax credit in this way going forward. It is not part of this current bill, but is expected to be addressed by another bill that apparently already has bipartisan support. They are talking about restructuring the IRS to be more than just a collection agency.

The child tax credit increase for 2021 is a done deal. It was in the bill signed by the House and Senate and is not expected to be altered by the House this go round. At this point, the bill just needs final house signatures and will be signed as is by the president.

 

[wings91]

I'm trying to pay off some credit too!

 

[Tygerlilly]

So, I've decided I'm going to "hack" the new child tax credit situation once the law passes. It seems the IRS will be setting up a portal where you can go to enter your filing status, number of qualifying kids, and taxable income from your last tax return. There will also be an option to "opt out" of direct payments.

They are going to do this tax credit in kind of a weird way, so pay attention:

The previous credit was $2,000 per child up through age 16. The new credit will be $3,000 per child up through age 18. It will be $3,600 for kids age six and under.

They plan to give people part of the total credit amount in the form of direct payments, beginning in July. They propose to send either $300 or $320 payments, depending on age of child. So, you will get either $1800 or $1920 per child, leaving a credit when you file NEXT year of $1200 or $1680 per child.

The part where this becomes problematic is that they will NOT be updating W4s or the way tax withholding is calculated. So, your pay will continue to withhold expecting a credit of $2000 per child. People who opt into the monthly payments will find themselves owing additional taxes at tax time, due to the actual credit applied being less than $2000.

Now, I'm not sure why this was overlooked, but I am going to do the following:

1. Opt OUT of direct payments
2. Adjust withholding on the W4 to withhold as though I have THREE children instead of 2. This way, they will withhold based on a total child tax credit of $6000 vs $4000, since that is the new amount my 2 kids will qualify me for. If I do this NOW, I start seeing more money in our paycheck NOW rather than having to wait until July. Plus, I have no surprise at tax time, because since I didn't take direct payments, I will have the full $6,000 credit applied to my taxes.

Now, I'm not a finance person, but this seems to be a workable plan. Does anyone see a glaringly obvious thing I might be overlooking?

I think I'm going to take the monthly credit and just have the most tax amounts taken out of my check from July-December for both of us. I feel like that should even everything out okay?

 

[DLgal]

I think I'm going to take the monthly credit and just have the most tax amounts taken out of my check from July-December for both of us. I feel like that should even everything out okay?

Well, yes, if you want a giant refund next year. I prefer to get our money upfront and earn interest in a savings account.

 

[Tygerlilly]

Well, yes, if you want a giant refund next year. I prefer to get our money upfront and earn interest in a savings account.

But will it be? I'd get less than the normal credit for taking the monthly payment plus only claiming that much for half the year. I might have to play with the numbers some.

 

[ruadisneyfan2]

So it seems Murphy likes hanging out with us and doesn't want to leave. After choking on the $5500 truck repair bill, dh's check engine light came on again. I can't take one more thing. I was so mad earlier, I could have driven his truck, Bigfoot style, right through the showroom all over the desks and little cars. Yeah, I'd probably get arrested, but it sure would feel good.

 

[afan]

So it seems Murphy likes hanging out with us and doesn't want to leave. After choking on the $5500 truck repair bill, dh's check engine light came on again. I can't take one more thing. I was so mad earlier, I could have driven his truck, Bigfoot style, right through the showroom all over the desks and little cars. Yeah, I'd probably get arrested, but it sure would feel good.

Is it possible they just didn't reset something after they made the repairs. That happened to my mom once and they just had to go in and reset the computer or something and all was fixed, no charge to her.

 

[ruadisneyfan2]

Is it possible they just didn't reset something after they made the repairs. That happened to my mom once and they just had to go in and reset the computer or something and all was fixed, no charge to her.

wow, I hope so!

 

[imbatman]

wow, I hope so!

Me too! Though, if you do the Bigfoot thing, please video the whole thing so we can see it later.

 

[DLgal]

So it seems Murphy likes hanging out with us and doesn't want to leave. After choking on the $5500 truck repair bill, dh's check engine light came on again. I can't take one more thing. I was so mad earlier, I could have driven his truck, Bigfoot style, right through the showroom all over the desks and little cars. Yeah, I'd probably get arrested, but it sure would feel good.

Wow. A $5500 repair bill on a truck? I'd just sell or trade the truck at that point. Something similar happened with DHs last car. It needed a $3500 repair. It was only worth $3000 in trade so we just traded it into the dealer for a new car. I hope that truck is worth at least 4 times that repair cost!

 

[pblack]

Me too! Though, if you do the Bigfoot thing, please video the whole thing so we can see it later.

I second this!! Proof or it didn't happen!

 

[Shanna-like-Banana]

We've been making little strides in our debt dumping.
We filed our taxes on the early side and already got our refund. What didn't go to paying down little debts went to savings for future expenses.
Aside from that, we've been graced with additional unexpected medical bills from our sons two arm surgeries. Poor kid had to have a reduction and pins set in his arm to repair the fractures.

Also, our method of having the prearranged birthday cards has already served us well. We've used 4 of them so far. I know what why I didn't think of that sooner

 

[ruadisneyfan2]

Wow. A $5500 repair bill on a truck? I'd just sell or trade the truck at that point. Something similar happened with DHs last car. It needed a $3500 repair. It was only worth $3000 in trade so we just traded it into the dealer for a new car. I hope that truck is worth at least 4 times that repair cost!

No, his is low mileage and still worth >$15,000.
New ones are like $50k and we dont want that big fat bill either.
Plus they already had the engine pulled apart so we had to quick decide.

 

[ruadisneyfan2]

We've been making little strides in our debt dumping.
We filed our taxes on the early side and already got our refund. What didn't go to paying down little debts went to savings for future expenses.
Aside from that, we've been graced with additional unexpected medical bills from our sons two arm surgeries. Poor kid had to have a reduction and pins set in his arm to repair the fractures.

Also, our method of having the prearranged birthday cards has already served us well. We've used 4 of them so far. I know what why I didn't think of that sooner

Wishing your son a speedy recovery.

 

[pblack]

I know many of us have personal goals of losing a few pounds and I wanted to share some YouTube videos that i've come across that i'm really enjoying. The videos are by Team Body Project (they also have a website, but I haven't really explored the website). I've done probably 4 or 5 of these videos now and they definitely work up a sweat. I really like them because they encompass all body sizes with their "models" and they are also super encouraging when talking to the "audience." I've really only done their stand up workouts (no getting on the floor required) and they average about 30 minutes. Just wanted to share with others who may need a little extra motivation in their journey or who just need something a little different then what they've been doing!

 

[Tygerlilly]

I know many of us have personal goals of losing a few pounds and I wanted to share some YouTube videos that i've come across that i'm really enjoying. The videos are by Team Body Project (they also have a website, but I haven't really explored the website). I've done probably 4 or 5 of these videos now and they definitely work up a sweat. I really like them because they encompass all body sizes with their "models" and they are also super encouraging when talking to the "audience." I've really only done their stand up workouts (no getting on the floor required) and they average about 30 minutes. Just wanted to share with others who may need a little extra motivation in their journey or who just need something a little different then what they've been doing!

I like them too! Another favorite of mine is Fitness Blender on YouTube as well.