How to opt-out of monthly child tax credit payments?
So if you are someone who does not want an advanced payment on your child tax credits…
…maybe because you are worried about your tax liability, or maybe you just like the idea of a big tax refund when you file your taxes, then you can opt out.
You can do so because the IRS just released a new tool on their website to help families manage all their child tax credit payments.
So in this post, we’re going to talk about how to opt-out of monthly child tax credit payments.
As well as how can you opt-in, how you can update your claim status, and more important updates.
Now as a reminder, there are several reasons why you may be automatically enrolled in advanced child tax credit payments, so it is up to you to opt-out.
Let’s talk about some reasons why you might want to opt out.
Reasons Why You Might Want to Opt-out of Child Tax Credit Monthly Payments
1. You are worried about owing money next year when you file your 2021 taxes.
And this could be a legitimate reason because you’re getting an advance on your child tax credits.
So technically, you will have less tax credits to offset any tax liability that you have when you file your tax return.
And if you already don’t pay a lot in taxes, or you make a high income, this could mean you end up having to pay more taxes when you file your next return.
2. You may not qualify for child tax credits.
We’ve seen this happen before – you think that you qualify, you meet all the requirements today, and then… life happens.
You could move to a new state, you could get a new job and then suddenly income has increased, and you no longer qualify for the same amount of the credits that you thought you would be.
Or in the reverse scenario, you could lose your job and you don’t support your children more than 50% and someone else can claim your kids as dependents.
Or, perhaps you decide to take a foreign job and you end up out of the country for more than half of 2021.
Or maybe you just have your own cynical reasons, like “The government is evil, there is no way they are going to give you free money. You’re going to have to pay it all back.”
The point here is that even though you qualify today, there are still 6 months left in the year and your life could change and knock you out of the monthly child tax credits.
So if you are anticipating big changes. That may be another reason to opt out.
3. You just want to get a big tax refund next year.
We get it, we’ve done taxes for over a decade now, and nearly all our clients have wanted to maximize their tax refund check.
Because maybe that’s your way of saving for a family vacation, or making a big purchase like a new car, or maybe you just like having that lump sum payment.
In either case, this is another big reason why so many people want to know how to opt-out of monthly child tax credit payments.
So you have your reasons, let’s now talk about how to do it.
Steps on How to Opt-out of Child Tax Credit Monthly Payments
The IRS has launched a new portal where families are going to be able to do a number of things, but the big thing right now is being able to unenroll (or opt out) for advanced monthly child tax credits in 2021.
Step 1: You need to access the child tax credit update portal.
And in order to do so, you must verify your identity. If you have an IRS account or ID.me account, all you have to do is sign in and you’re good.
If you don’t have an IRS account yet, then sign up and verify your identity by providing a photo identification. They take this very seriously to prevent as much fraud as possible.
Step 2: Go to the IRS website.
After that, click this link – Advance Child Tax Credit Payments in 2021
Once you get to this link, you will see a page that looks like this.
And you probably can tell what you need to do from right here. You click the blue “Unenroll from advance payments” button and then fill out a form to unenroll.
Now if you’ve been reading this and you are wondering, how to opt-in? Then it will be a very similar process.
The thing is, right now, the portal is still being developed. So the opt-in features are not available yet.
In fact, the IRS portal is going through a number of updates that will allow families to:
- check the status of their payment,
- update their bank account information (starting in August),
- update mailing address, and
- in the fall, update family status and income changes.
But for now, remember you are automatically enrolled if you:
- Filed a 2019 or 2020 tax return with the child tax credit.
- You have given information to receive a prior stimulus check for your child.
- You have a qualifying child under the age of 18 at the end of 2021 and they have a valid social security number.
- You made less than a certain amount of income and made a little income as well.
Now if you want to know more about how to exactly qualify for the child tax credits then make sure you read our previous post Child Tax Credit Portal Update.
Or, check out this post breaking down the child tax credit FAQs and the answers you need.
And you still need more clarification regarding your tax situation, don’t hesitate to reach out to one of our tax consultants. Contact us today!