Share custody? You may want to opt out of the Child Tax Credit payments
WAUSAU, Wis. (WSAW) - Starting July 15, parents will receive the first of six Child Tax Credit payments. However, parents who rotate claiming children on their taxes may need to opt out.
For example, if 2021 is not your year to claim your child or children, you will likely have to pay back the advanced CTC payment to the Internal Revenue Service or to the other parent.
The IRS will send the payments to parents that claim the child or children in 2020.
“It’s just a way for the IRS to put money in the pockets of families that have children that would be eligible as dependents instead of waiting all the way until February, March, April,” Hertel Tax and Accounting Owner Chris Hertel said.
Hertel said for split families, opting out might be the right move, if it’s not your year to claim your kids.
“So in the years that they don’t claim that child, maybe they owe in a little bit or they get back maybe $200 or $300, well now they’ve got $1,800 on their tax return that has to be reconciled and says ‘hey, you’ve already got this much, so you owe us this much back before you start getting it,’” Hertel said.
Hertel said the best way to manage any changes to your information and opt out is by visiting irs.gov and using the child tax update tool.
He said if your information and amount of children hasn’t changed between 2019 and 2021, there’s no need to fret.
“If something changed from ’19 to ’20 and in 2021 it’s going to be significantly different, go on there, change it. Do not end up owing in at the end when you have the power not to,” Hertel said.
Parents are automatically enrolled in the program, unless they opt out. Families with kids ages 5 and younger will receive payments of $300 per month from July 15 until Dec. 15 or $250 per month for 6 to 17-year-olds.
It is too late to opt-out of the July 15 payment, however, people can opt-out of the later payments using the IRS portal. CLICK HERE to manage your payment. Updating payment information should only be done on the IRS’ website.
Additional payments will arrive on Aug. 13, Sept. 15, Oct. 15, Nov. 15, and Dec. 15.
CNBC reports people who claimed a 17-year-old child on their 2020 tax return will also want to opt-out as the child will turn 18 and not qualify for those payments. This means you may be on the hook for any payments sent to your family.
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