Earlier this week, I shared with you the things you need to know about the Child Tax Credit, where payments to U.S. families are slated to begin on July 15.
Today, I’ll share with you the reasons why you may want to consider opting out of the payments and how to go about doing so.
The Child Tax Credit is an advancement of the benefit you will receive on your 2021 taxes. It is not a stimulus payment.
The benefit has been bumped up from $2,000 to $3,600 per child for kids under age 6 and $3,000 per child between the age of 6 and 17.
Single parents, who make less than $112,500 annually and couples who make less than $150,000 annually qualify to receive the advance payment.
The IRS is basing your qualification for the benefit off of your 2020 tax returns (or 2019 if you haven’t filed yet).
Where the water gets murky is you could end up having to pay the money back if your income increases this year.
If you’ve obtained a higher paying job, a promotion, a raise, or any other financial windfall that causes your income to exceed the threshold for the Child Tax Credit, you will have to pay the benefit back or the money will be deducted from your refund on your 2021 tax return.
Families who are very close to the income threshold are playing it safe and opting out of receiving the benefit.
The IRS has unveiled a new portal that will allow you to opt out of the payments.
But, it is very important that you note:
- The first payment will be issued on July 15, so the deadline to opt out of the payment is June 28.
- August 2 is the deadline to opt out of the August 13 payment.
- August 30 is the deadline to opt out of the September 15 payment.
Once you opt out of the CTC payments you can’t jump back in.
It’s important for you to assess your finances, as well as your financial needs at this time, to determine if receiving the payments now or playing it safe and waiting until later is best for your family.