The IRS began initiating payments on July 15 to those who qualify for a Child Tax Credit (CTC). Families and individuals who filed their 2019 or 2020 tax return and claimed child tax credit are automatically enrolled in the CTC program and eligible to receive payments for the rest of 2021.
This advanced payment program offers immediate relief to families as opposed to waiting for a lump sum payment after tax returns are filed and processed by the IRS in 2022.
The CTC monthly advance puts an extra $300 per child under 6, and $250 per child aged 6 through 17 into the household budget. However, at least one million tax filers have already chosen to unenroll from the program.
Here are some reasons why:
• Fear or concern over a larger than expected tax bill next year due to an increase in income or other financial adjustment.
• The family situation is subject to change due to divorce or a teen expected to age out before the end of 2021.
• A divorce settlement that alternates child custody or the legal right to deduct eligible minors from year to year.
• Preference to receive a lump sum in 2022 to save for a big expense.
For those wishing to unenroll and not receive next month’s payment, the IRS stipulates taxpayers must opt out three days before the first Thursday of the month, which means opting out prior to August 2.
The IRS set up a CTC opt out tool within the portal.
Steps to take:
1. Head to the IRS portal.
2. Click “Manage Advance Payments.”
3. Sign in using your IRS or ID.me account.
4. Review your eligibility and unenroll.
5. If married, both parents are required to opt out.
NOTE: Parents may also add newborns using the CTC portal to begin receiving payments.
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.