Advance Child Tax Credit Online Tools
The IRS created a new online tools with an aim to help families manage the advance monthly child tax credit (CTC) payments. The first payment will be made on July 15, 2021.
The tools include:
Child Tax Credit Eligibility Assistant: a questionnaire to help families determine whether or not they qualify for the advanced CTC
Child Tax Credit Update Portal: provides families an ability to verify their eligibility for the payments and the option to opt out from receiving the monthly payments
Child Tax Credit Non-filer Sign-up Tool: offers qualifying families the ability to register for payments even if they do not normally file an income tax return
More Features Coming Soon
Coming soon, The IRS plans for families to be able to use the portal to check the status of their advanced CTC payments. Starting late June, families will be able to update their bank account information for August payments. In early August, families will be able to update their mailing address in the portal. Later this summer and fall, individuals can use the portal to update their status and income information instead of waiting until they file income tax returns.
Portal Allows for Unenrollment
Instead of receiving these advance payments, which splits your credit into monthly amounts, some families may prefer to wait until the end of the year and receive the entire credit as a refund when they file their 2021 return as they have done in previous years. In this first release of the tool, the Child Tax Credit Update Portal enables these families to unenroll from receiving monthly payments.
The unenroll feature can also be helpful to any family that no longer qualifies for the Child Tax Credit or believes they will not qualify when they file their 2021 return. This could happen if, for example:
Their income in 2021 is too high to qualify them for the credit
Someone else (an ex-spouse or another family member, for example) qualifies to claim their child or children as dependents in 2021
Their main home was outside of the United States for more than half of 2021
If a family did not qualify yet received the advance payments, they would need to pay back the credit they received.
Accessing the Portal
To access the CTC Update Portal, a person must first verify their identity. If a person has an existing IRS username or an ID.me account with a verified identity, they can use those accounts to easily sign in. People without an existing account will be asked to verify their identity with a form of photo identification using ID.me, a third party trusted by the IRS. Identity verification is an important safeguard and will protect your account from identity theft.
A Word of Caution
It is important to remember these payments are advances on your year-end credit. By not stopping the payments, you will reduce your federal refund by the same amount. For example, if you qualify for the credit and have 2 children between the ages of 6 and 17, your credit is $6,000. When you receive a full year of the payments, you reduce your refund by $6,000. If you normally would receive a refund of $2,000 you would instead owe $4,000.
If you choose to continue receiving the monthly advance payments, it is imperative that you adjust your federal withholding to ensure no surprises exist when your tax returns are prepared.
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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Level Books assumes no liability for actions taken in reliance upon the information contained herein.
