Advance payments for federal Child Tax Credit, which are being issued as part of President Joe Biden‘s American Rescue Plan, will be issued to those eligible starting in July, the president said in a statement on June 21. The Child Tax Credit offers $3,000 to families with children aged between six and 17 years old, and $3,600 to those with children under six years old. Biden explained advance Child Tax Credit payments allow “half of the tax cut to be paid to families in advance through a monthly check or direct deposit.
The IRS said: “You will claim the other half [of your full Child Tax Credit amount] when you file your 2021 income tax return. These changes apply to tax year 2021 only.” The federal body said the advance monthly payments will begin on July 15 and payments will be issued every month after then through December 2021. Americans who qualify for child tax credit will be automatically enrolled to receive advance payments. Those who prefer not to receive the payments in advance, and would rather claim the full Child Tax Credit amount when they file their 2021 tax return, can opt out of receiving the payments on the IRS website.
What Is Advance Child Tax Credit?
The IRS explains: “Advance Child Tax Credit payments are early payments from the IRS of 50 percent of the estimated amount of the Child Tax Credit that you may properly claim on your 2021 tax return during the 2022 tax filing season.
“If the IRS has processed your 2020 tax return or 2019 tax return, these monthly payments will be made starting in July and through December 2021, based on the information contained in that return,” the federal body says.
Why Should I Opt Out of It?
The IRS says those who anticipate the tax owed when they file their 2021 tax return will be greater than their expected tax refund for that year may wish to opt out of receiving advance payments for Child Tax Credit. The IRS explains: “The payments you receive are an advance of the Child Tax Credit that you would normally get when you file your 2021 tax return. “Because these credits are paid in advance, every dollar you receive will reduce the amount of Child Tax Credit you will claim on your 2021 tax return. This means that by accepting advance child tax credit payments, the amount of your refund may be reduced or the amount of tax you owe may increase. “You may avoid owing tax to the IRS if you unenroll and claim the entire credit when you file your 2021 tax return,” the federal body notes.
How Do I Opt Out?
Those who don’t want to receive an advance tax credit payment can opt out at the Child Tax Credit Update Portal of the IRS website and click on the “Unenroll from Advance Payments” icon at the bottom of the webpage. The portal notes: “If you don’t have an existing IRS username or ID.me account, have your photo identification ready.”
Payment Dates and Deadlines for Unenrolling
The federal body says in order to stop advance child tax credit payments, you must unenroll three days before the first Thursday of the following month by 11:59 p.m. ET. You don’t have to unenroll every month. Below are the dates for advance child tax credit payments and the corresponding deadlines for unenrolling, as outlined by the IRS.
|Advance Child Tax Credit Payment Month||Deadline for Unenrolling||Payment Date|
See the IRS website for more information on unenrolling from receiving advance child tax credit payments. See the original article here from newsweek.com.