May 8, 2021

Global news 24hours

World at your fingertips

Should you opt out of the child tax credit payments? Here’s how and why you’d want to – CNET

4 min read
002-cash-money-up-to-3600-dollar-child-tax-credit-calculator-stimulus-federal-bill-taxes

You can opt out of getting child tax credit payments.

Sarah Tew/CNET

The first child tax credit payment will go out in July to eligible families with qualified dependents. If you’re one of the millions who qualify, you can expect between $500 and $3,600 per kid, depending on their age and your 2021 adjusted gross income. However, you have options when it comes to choosing exactly when you’ll get your money.

While you could get your monthly payments from July until December, with the second half coming next year, you can instead choose to get one large payment with your tax refund in 2022.

If you’d prefer to opt out of getting the smaller child tax credit payments, we’ll explain what you need to know, including why you might want to in the first place. While you’re here, if you haven’t received your $1,400 stimulus check yet or you’re waiting on a “plus-up” payment, here’s how to track it down. In addition, your state could owe you hundreds of dollars — it takes 2 minutes to check. Plus, here’s how Biden’s new stimulus plan could bring you even more money.

Reasons you might want to opt out of the child tax credit payments this year

If you’d rather receive your child tax credit payments in one lump sum rather than seven smaller payments, you can choose to opt out of the payments in July. Here are some reasons you may want to opt out:

  • You’d rather have one large payment next year.
  • You know your circumstances will change and don’t want to deal with updating your information in the portal the IRS plans to open by July 1. (The portal is where you can update the IRS about any significant changes that pertain to you.)
  • You’re concerned the IRS might accidentally send you an overpayment and you don’t want to worry about paying that money back.

Now playing: Watch this: Child tax credit: How much are you getting?

3:52

How opting out of the monthly child credit payments would work

Be aware that if you opt out of receiving 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; 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 six monthly payments this year, you’d get $300 each month and another $1,800 with your tax refund. You can use our child tax credit 2021 calculator to estimate how much you should get.

If you don’t update your information in the portal and you file your taxes before the May 17 deadline, you’ll automatically receive the monthly payments. More below on how to opt out.

Now playing: Watch this: Stimulus plus-up payments: What you need to know

2:58

How to opt out from getting the child tax credit payments in 2021

By July 1, the IRS will open a portal that’s designed specifically for the new child tax credit payments. You can also use it 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 for the forms available for folks who want to opt out,” IRS Commissioner Charles Rettig said April 13.

We’re not sure how the portal will look or what the process will be, but we do know it 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. 

We’ll know more about the details you can change once the IRS portal is up and running — the IRS won’t have the resources to build the portal until after tax season.

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 CTC payment timeline and the extra thing parents of 2021 babies will need to do to claim their CTC payments.

Source

Leave a Reply

Your email address will not be published. Required fields are marked *