Parents who unenroll from the advance child tax credit payments will get one lump sum during tax time in 2022.
Nervous you might end up owing the IRS next year? Or maybe you’re saving for a big expense or have a complicated custody situation. Regardless of your circumstances, unenrolling from the monthlycould help ease your worries. In fact, at least 1 million filers have chosen to opt out of the payment schedule. It could be because they’re concerned about getting an next year or just that it’s their budgeting preference to get a bigger amount of the credit during tax season.
The 2021 expansion of the program givesa monthly advance credit worth up to $300 per child under 6, and $250 per child aged 6 through 17, and that money can be used now. For families opting out, it doesn’t mean they’re declining the credit: They’re just deferring when they receive the extra cash. The advance checks are based on 2020 tax returns or the most recent year the IRS has on file, so keep that in mind when you consider opting out of the monthly checks. More on that below.
To opt out before the August check is sent, you’ll have to set up an account through the, unenroll before Aug. 2 and plan to claim the money when you in 2022. We’ll explain how to use the Update Portal to manage your payments and the deadlines for opting out in 2021. If you decide to continue getting the payments, here are some ways to . This story has been updated.
3 reasons some parents are opting out of advance payments
Here are some reasons why unenrolling from the 2021 advance child tax credit program could be a good idea:
- You’d rather have one large payment next year instead of seven smaller payments spanning 2021 and 2022. This could be the case for families saving up for a big expense or those who’ve budgeted that money to pay off outstanding debt.
- You know your household circumstances or tax situation will change (or it or they have already changed) this year and don’t want to deal with having to update your information in the portal. This could be the case for divorced parents who alternate custody of a child.
- You’re concerned the IRS might send you an overpayment based on old tax information from 2020 or 2019, and you don’t want to worry about paying that money back. That could be the case if your household income goes up or if a dependent ages out of an age bracket before the end of 2021.
How to opt out of 2021 payments via the portal
If you want to unenroll, your next shot is to do it by Aug. 2 for the Aug. 13 payment. You can opt out anytime in 2021 to stop receiving your remaining monthly advances, even if you’ve already received a payment. To unenroll, the IRS said you must opt out three days before the first Thursday of the month in order to not receive the next month’s payment. See the chart below for more.
If you miss a deadline, the IRS said you will get the next scheduled advance payment until the agency can process your request to unenroll. According to the IRS, currently, if you unenroll then you can’t reenroll yet. Starting in late summer, you should be able to opt back in.
Here’s how to unenroll:
1. Head to the new Child Tax Credit Update Portal and click the Manage Advance Payments button.
2. On the next page, sign in using your IRS or ID.me account. If you have neither, the page will walk you through setting up an ID.me account. You’ll need an email address, a photo ID, your Social Security number and a smartphone or tablet to verify your identity.
3. On the next page, you can see your eligibility and unenroll from the monthly payments.
Child tax credit payment unenrollment dates
|Payment month||Unenrollment deadline||Payment date|
|July||June 28||July 15|
|August||Aug. 2||Aug. 13|
|September||Aug. 30||Sept. 15|
|October||Oct. 4||Oct. 15|
|November||Nov. 1||Nov. 15|
|December||Nov. 29||Dec. 15|
For married parents, both need to opt out, not just one
Unenrolling applies only to one individual at a time. So if you’re married and file jointly, both you and your spouse will need to opt out. If only one of you does so, you will get half the joint payment you were supposed to receive with your spouse, the IRS said.
How unenrolling impacts tax filing in 2022
Those who choose to decline this year’s child tax credit installments (amounting to half the total) will still receive the same amount of money in the end, but are simply delaying when they receive it. So if you have a child who’s 5 years old or younger by the end of 2021 and your, you’ll get $3,600 total when you file your taxes in 2022.
Be aware that if you unenroll from getting the monthly child tax credit payments this year, you won’t get your full payment — or any payment at all — until after the IRS processes your 2021 tax return in 2022. The total amount will then arrive with your tax refund or can be used to offset any taxes you owe at that time; you’ll be in a situation similar to people who have had tothis year.
However, if you choose to receive monthly advances, you’d get six installments of $300 payments each month this year and another $1,800 with your tax refund next year instead. Keep in mind that if you take the money in advance now, it could lower your tax refund next year because you may get more money than what is owed to you. It will also mean you’ll have fewer deductions since you’ve already collected the credit.
You can use ourto estimate how much you should get and see a breakdown of the monthly payments if you choose not to opt out and meet all eligibility requirements.
Child tax credit payment schedule
|Monthly check||Maximum payment per child 5 and younger||Maximum payment for each child; 6 to 17|
|April 2022: Second half of payment||$1,800||$1,500|
Parents who don’t usually file taxes can register for enhanced payments
If you filed your taxes before the May 17 deadline, then you’ll automatically receive the advance monthly payments starting July 15. An online IRSis also available for families who don’t normally file income tax returns so they can register with the agency and receive payments. However, the tool has been criticized for not being easy to use — especially on a phone.
Other ways you can use the IRS update portal this year
The Child Tax Credit Update Portal will also let you add any changes that’ve happened since you last filed your taxes. For example, if youor gained a or if your income recently changed, the IRS wouldn’t have that on file yet.
Before the end of 2021, the IRS will give the portal more functionality. By early August, you’ll be able to update your mailing address. Later in the summer, you’ll be able to add or subtract qualifying children, report a change in your marital status or income or reenroll in monthly payments if you previously unenrolled.
For more child tax credit information, here’s what to know about the child tax creditand how to estimate your total payment using CNET’s .
Published at Mon, 19 Jul 2021 21:52:17 +0000
This post originally posted here https://www.cnet.com/personal-finance/taxes/how-to-opt-out-of-the-child-tax-credit-3-reasons-you-may-want-to-before-aug-2/#ftag=CADf328eec