The first 2021 Child Tax Credit payments will be sent to eligible parents beginning on July 15, 2021. It is too late for taxpayers to opt out of the first payment, but taxpayers can opt out of the remaining payments until the August 2nd deadline. For every subsequent opt out deadline, the Internal Revenue Service ("IRS") will require taxpayers to opt out no later than three (3) days before the first Thursday of the month in which payment will be dispersed (e.g. the September opt out deadline is August 30th because the first Thursday in August is August 2nd). If taxpayers file a married joint tax return, both spouses must opt out separately.
Who might want to opt out of the Child Tax Credit payments?
· Taxpayers who share joint custody of children may want to opt out if they are ineligible to claim shared children in 2021;
· Taxpayers who expect to receive an increase in income in 2021 that will no longer allow them to qualify for the Child Tax Credit; or
· Taxpayers who do not need or want the payments during 2021.
Taxpayers opting out of receiving these payments may take the full credit when they file their individual tax return in 2022 to lower of the amount of tax due or increase their refund.
It is important to remember that these payments are not stimulus checks, but advances on the child tax credit. The advances are based on the amount of income reported for 2020. If taxpayers do not qualify for the Child Tax Credit at the end of 2021, they will be expected to pay this money back when filing their individual tax return in 2022.
Eligible filers must have an adjusted gross income of less than $150,000 if filing jointly, $75,000 if filing as single, and $112,500 if filing as head of household. Children ages 0-5 allow for a $3,600 credit, while children ages 6-17 allow for a $3,000 credit per dependent child.
If you are ready to opt out of these payments or simply want to check your eligibility, visit the IRS website https://www.irs.gov/credits-deductions/child-tax-credit-update-portal. If you need assistance in determining if increases or changes to your 2021 income disqualify you from receiving the child tax credit, please contact our office.
