On July 15, the first tranche of the monthly child tax credit payments will begin to hit millions of bank accounts. Half of the entire credit - $1,800 of the $3,600 credit for children under the age of six and $1,500 of the $3,000 credit for children ages six to 17 - is given to qualifying families in six monthly payments of $250 or $300. The payments will be made by the IRS from July through December, and parents will be able to claim the remaining half of the credit next year when filing their taxes.
You may choose to opt-out of these automated payments for a variety of reasons. Your child tax credit payment eligibility is determined by your 2020 tax return. If your or your spouse's income increases enough in 2021 to exceed the threshold for the child tax credit, you will almost certainly receive a tax statement and owe money to the IRS. Individual filers must earn $75,000 and joint filers must earn $150,000 to qualify for the full credit.
According to AS.com, opting out might also be motivated by personal preference. It may be a good idea to opt-out of the monthly payments now if you prefer to get one lump sum next year rather than numerous little payments and a smaller lump sum next year. Keep in mind that receiving this money means you will have to wait until your 2021 return is finalized.
Why should you opt-out of Child Tax Credit payments?
Although monthly payments are the usual option, parents do have different choices about how they get their funds. The IRS typically sends qualified families six monthly installments, with the remaining six months' worth of money arriving as a lump sum tax credit at the end of the year.
The Child Tax Credit was formerly distributed as a single end-of-year tax credit, which some families used to decrease their existing tax debt or as insurance in case they were confronted with a larger-than-expected tax bill. It may make sense to opt-out of the monthly payments if you are accustomed to depending on the Child Tax Credit while completing your taxes.
You won't have to pay back the monthly payments if your circumstances change in 2021 if you choose to get your Child Tax Credit entitlement at the end of the tax year. Someone who earns more money in September, for example, may no longer be eligible for the Child Tax Credit since their adjusted gross income has risen beyond the $75,000 level.
If that's the case, they'll have to pay back a portion or all of the Child Tax Credit payments they've already received in 2021. By opting out of regular payments, you avoid being overpaid and being required to repay the money. Here are some tips that you may consider if you've decided to opt-out or if you need to change any information for your Child Tax Credit monthly stimulus checks, as per Forbes:
- Be ready for a high-tech procedure with all of the flaws that entail.
- Prepare for questions involving knowledge-based authentication (KBA). Have information about your mortgage or credit card accounts available in case you're asked a question about them.
- Make sure you have a phone plan in your name. You might not be able to create an account if you have a family plan and your name isn't listed on the plan.
- Bring your photo ID with you. Either a driver's license or a passport from the United States. The ID.me system will compare your face to the face on the picture ID using the camera or webcam on your phone.
How to opt-out of Child Tax Credit payments?
You'd rather have one significant payment next year than seven smaller ones spread out across the years 2021 and 2022. This might be the case for families saving for a major purchase or individuals who have set aside funds to pay off debt.
You don't want to deal with having to update your information on the portal since your household circumstances or tax status may change. You're worried that the IRS may issue you an overpayment due to changes in your position this year, and you don't want to have to pay it back next year. Either way, here is how to opt-out the monthly stimulus checks in Child Tax Credit, according to CNET:
- Click the Manage Advance Payments option on the new Child Tax Credit Update Portal.
- Sign in with your IRS or ID.me account on the following page. If you don't have either, the website will guide you through the process of creating an ID.me account. To verify your identification, you'll need an email address, a photo ID, your Social Security number, and a smartphone or tablet.
- On the following page, you may check your eligibility and opt-out of monthly payments.
Keep in mind that the deadline to make modification has already passed before the first payments. You should have submitted your request to opt-out of the July 15 payment, not later than June 28. However, it is not too late to opt-out of future payments. Until August 2, you will not get the monthly stimulus check till mid-August, as long as you finish the unenrollment procedure.