Want to opt out of the monthly child tax credit payments? We’ll explain how

Want to opt out of the monthly child tax credit payments? We’ll explain how

We’ll tell you how to decline the child tax credit monthly payments and why you might want to wait for the full amount in 2022 instead.

Many eligible families in America will get a child tax credit payment on July 15. Each monthly payment will be for up to $300 per kid, depending on their age and your income. However, you can opt out of receiving the monthly checks and wait to get the full amount — up to $3,600 per kid — in 2022.

Once the IRS opens its two portals — that will be by July 1 — you can use one to decline receiving the monthly payments. You can also use one of the portals to make changes and update your household details. You might want to start thinking about how to spend your child tax credit money when it comes.

In addition to the child tax credit, you can also claim up to $16,000 in child care expenses as a tax break next year. If you’re still waiting on your $1,400 stimulus check or your “plus-up” payment, here’s how to track it down. And here’s what we know about the new stimulus plans and how they might bring you more money. This story gets regular updates.

Some benefits of declining the child tax credit payments

Here are some reasons why opting out of the monthly child tax credit payments may be a good idea:

  • You’d rather have one large payment next year instead of seven smaller payments over 2021 and 2022.
  • You know your circumstances or tax situation will change and don’t want to deal with updating your information in the portal the IRS plans to open by July 1.
  • You’re concerned the IRS might accidentally send you an overpayment, and you don’t want to worry about paying that money back.

Payment schedule for those who choose to opt out

Be aware that if you opt out of getting the monthly child tax credits from July through December, you won’t get your full payment — or any payment at all — until after the IRS processes your 2021 tax return next year. The full payment will then arrive with your tax refund, or could be used to offset any taxes you owe at that time; you’ll be in a similar situation to those people who had to claim missing stimulus checks on their taxes this year.

So if you have a child who’s 5 years old or younger by the end of 2021 and your income meets the requirements, you’ll get $3,600 total when you file your taxes in 2022. However, if you choose to receive monthly payments, you’d get six installments of $300 payments each month this year and another $1,800 with your tax refund next year. You can use our child tax credit 2021 calculator to estimate how much you should get.

Opting out through one of the IRS portals

By July 1, the IRS will open those two portals designed specifically for the new child tax credit payments. One of them will be used to opt out of receiving multiple payments this year. We’ve asked the IRS about how exactly you’ll be able to do this. We do know the IRS will have paper forms available for those who don’t have internet access. “We will make forms and instructions available for folks who want to opt out,” IRS Commissioner Charles Rettig said April 13.

We’re not sure how the portals will look or what the process will be, but we do know they can be used to update your record with any changes that have happened since you last filed your taxes. For example, if you had a new baby in 2021 or have gained a new qualified dependent, the IRS wouldn’t have this information on file yet. Or maybe your income has changed recently.

If you don’t update your information in the portal and you filed your taxes before the May 17 deadline, you’ll automatically receive the monthly payments. We’ll know more about the details once the IRS portals are up and running — the IRS should have more resources to build the portals now that tax season is coming to an end.

For more child tax credit information, here’s what you need to know if you share custody of a child. Also, here’s what to know about the child tax credit payment timeline and the extra thing parents of 2021 babies will need to do to claim their payments.

 

Source : cnet

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