, Taxpayers Can Now Opt Out Of Advance Payments Of The Child Tax Credit, The Nzuchi News Forbes

Taxpayers Can Now Opt Out Of Advance Payments Of The Child Tax Credit

, Taxpayers Can Now Opt Out Of Advance Payments Of The Child Tax Credit, The Nzuchi News Forbes

The American Rescue Plan expanded the Child Tax Credit from up to $2000 to up to $3600 per child for qualifying children. The entire amount of the credit is now fully refundable. That is, even low-income taxpayers who owe no federal income tax are eligible for the full amount of the credit.

The portal for taxpayers who are not required to file a federal income tax return opened earlier this month. The IRS portal that allows taxpayers to opt out of receiving advance payments of the newly expanded child tax credit is now live. The new portal allows taxpayers who filed a 2019 or 2020 tax return to determine their eligibility for the credit (although most of those taxpayers should have received a letter confirming their eligibility); to see the amount of their advance payments; and to opt out of receiving payments if they wish to do so.

Payments are expected to start hitting bank accounts and mailboxes on July 15th so taxpayers wishing to opt out of receiving the payments should elect to do so as soon as possible. Why would a taxpayer wish to opt out of the advance payments? The short version is that, unlike Economic Impact Payments (stimulus checks) taxpayers who receive more advance payments than they are eligible for (based on their 2021 income and qualifying children) will have to pay back excess payments. Taxpayers who are close to the phaseout limits for the credit or who alternate custody years with another qualifying taxpayer may end up receiving payments that they will have to repay when they file their 2021 tax returns next spring. Even taxpayers who are certain they will qualify for the full amount of the credit may want to opt out if they don’t need the money right now. Opting out will result in either less tax due (if the taxpayer normally has a balance due on their return) or in a larger refund.

Further Reading:

, Taxpayers Can Now Opt Out Of Advance Payments Of The Child Tax Credit, The Nzuchi News Forbes

As Vice President Harris Talks Up Child Tax Credit, Here’s What You Really Need To Know About Monthly Payments Starting In July

What To Know About The New And Upcoming Child Tax Credit Portals

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