Opting out of the child tax credit payments: 3 reasons to do it by Aug. 2

Opting out of the child tax credit payments: 3 reasons to do it by Aug. 2

If you opt out of the advance child tax credit payments this year, does that mean you won’t get any money at all? No — it means you’ll get one large check during the 2022 tax season instead, and at least 1 million households have already unenrolled. Why is that? It could be as simple as preferring to get a bigger amount next year, or it could be out of concern that you might get an unexpected tax bill in the spring.

Here’s how it works: Through December, eligible households are getting a monthly advance credit of up to $300 per child under 6, and $250 per child aged 6 through 17. The first check already went out July 15. To opt out of getting the second check on Aug. 13, you’ll have to do so before Aug. 2. Keep in mind that the amount of the advance checks is based on 2020 tax returns or the most recent year the IRS has on file. We’ll explain why that’s important below.

The key to managing your child tax credits is the online Update Portal, which requires setting up an ID.me account. Before reviewing the details and deadlines for opting out in 2021, think about if your household situation is changing this year, whether it be a new job or a new baby. If you decide to continue getting the advance payments to cover expenses now, here are some ways to spend your child tax credit money. This story has been updated recently.

Top reasons families have unenrolled from the payments

Here are some cases where unenrolling from the 2021 advance child tax credit program could be a good idea:

  1. You’d rather have one large payment next year instead of seven smaller payments spanning 2021 and 2022. This could be the case for families saving up for a big expense or those who’ve budgeted that money to pay off outstanding debt.
  2. You know your household’s circumstances or tax situation will change (or they’ve already changed) this year and don’t want to deal with having to update your information in the IRS portal. This could be the case for divorced parents who alternate custody of a child.
  3. You’re concerned the IRS might send you an overpayment based on old tax information from 2020 or 2019, and you don’t want to worry about paying any of that money back next year. That could be the case if your household income goes up because you’ve returned to work or got a new job. It could also be the case if a dependent you claimed previously is aging out of an age bracket before the end of 2021…Read more>> 

Source:-cnet

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