IRS child tax credit 2021: Payment schedule, opt-out deadlines and more

In the event you qualify for the kid tax credit score, you have seemingly acquired your July 15 cost by way of direct deposit or within the mail. However when will the second cost arrive and what is the deadline for opting out of the funds if you wish to wait till subsequent 12 months to get your cash?

The quantity of the kid tax credit score checks is way increased this 12 months, with half the cash arriving in month-to-month funds from July by way of December. The opposite half is available in one payout throughout tax season in 2022. However early funds are non-obligatory; dad and mom can choose out in the event that they’re ineligible or in the event that they’d reasonably get the entire quantity throughout 2021 tax time. (Estimate your whole with CNET’s calculator.) In the event you’re nonetheless ready for July’s verify, we are able to additionally reply a few of your burning questions concerning the cash.

You might also be frightened about how early funds now will have an effect on your 2022 taxes, particularly because the IRS bases this 12 months’s funds in your 2020 tax return. Fortuitously, you need to use the net IRS portals to replace your data and estimate your whole quantity. We additionally counsel how dad and mom may wish to use the cash and let you know the best way to declare as much as $16,000 extra for baby care prices. This story is up to date regularly.

What if I do not get any of my baby tax credit score cash?

One factor to remember is that the IRS is focusing on the cost dates (see above). You probably have direct deposit arrange with the IRS, you may see a pending cost earlier than the precise deadline. Which means you won’t have the ability to entry the cash straight away, however that it is in course of.

It might take longer on your cost to reach for those who’re receiving the verify by mail. If sufficient time has handed and also you’re involved there could also be an issue, you need to use the IRS Replace Portal to right your direct deposit data. It’s also possible to file an IRS cost hint for those who’re frightened. Examine right here for extra details about lacking funds.

When will the following baby tax credit score cost be disbursed?

You will not get all the baby tax credit score cash this 12 months. You may get half of the cash in month-to-month funds, and the remainder in 2022 whenever you file your taxes, except you inform the IRS you need to unenroll from the advance month-to-month funds to get one lump sum subsequent 12 months. The subsequent verify will probably be disbursed on Friday, Aug. 13.

So in different phrases, your largest cost arrives subsequent 12 months — as much as $1,800 per baby. Till then, you get six smaller funds whole this 12 months to begin utilizing straight away. The concept is to carry you cash sooner to satisfy bills like hire, meals and day care, which is why the checks are “advance funds.”

Tips on how to choose out of the kid tax credit score earlier than the August cost

Advance funds are non-obligatory, and despite the fact that nearly all of US households are eligible many nonetheless do not qualify. In the event you’re unsure that you just qualify you could choose to choose out to keep away from repaying the IRS. The subsequent deadline to choose out is Monday, Aug. 2, however you need to use the IRS Little one Tax Credit score Replace Portal on-line anytime between now and December to unenroll. You might wish to unenroll for those who do not meet earnings or different eligibility necessities.

To cease advance checks, the IRS says you have to unenroll three days earlier than the primary Thursday of the next month. See the chart under for deadlines. When you unenroll on this 12 months’s advance funds, you’ll be able to’t but reenroll, although the IRS says it can make that choice accessible later. Additionally word that for {couples} who’re married and submitting collectively, every mum or dad should unenroll individually. It’s too late to choose out of the July cost, however you’ll be able to unenroll for the remainder of the month-to-month funds.

What can I do with the IRS baby tax credit score portals?

In June, the IRS opened extra on-line instruments and portals. The primary portal is for folks not usually required to file an earnings tax return, together with low-income households. And the Little one Tax Credit score Eligibility Assistant software — accessible in English and now in Spanish — helps households rapidly decide whether or not they qualify.

The Little one Tax Credit score Replace Portal at present lets households see their eligibility, handle their funds and unenroll from the advance month-to-month funds. Dad and mom also can replace their direct deposit data utilizing the portal. Within the coming months, it can permit households to replace different data if their circumstances modified — for instance, if a brand new baby has arrived or will arrive in 2021 and is not mirrored in your 2020 tax return. You may additionally have the ability to replace your mailing deal with, marital standing, earnings or dependents to have probably the most up-to-date eligibility data.

This helpful IRS PDF additionally describes what the portals do.

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Child tax credit: Everything we know

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Is my income too high to qualify for enhanced payments?

Income limits determine how much you will receive and if you even qualify, though there is no limit on the number of children you can receive credit for as long as you’re eligible.

Single filers earning less than $75,000 per year, heads of household earning less than $112,500 per year and married couples earning less than $150,000 a year will be eligible for the full amount.

The amount you’ll get will then phase out for higher incomes. Your child tax credit payments will phase out by $50 for every $1,000 of income over those threshold amounts, according to Joanna Powell, managing director and certified financial planner at CBIZ. In other words, your family could still receive some money above those income limits, but it won’t be for the maximum payment.

How much money can I get for each of my dependents?

How the child tax credit payments will be divided between 2021 and 2022 might be confusing. For each qualifying child age 5 and younger, up to $1,800 (half the total) will come in six $300 monthly payments this year. For each kid between the ages of 6 and 17, up to $1,500 will come as $250 monthly payments six times this year.

The IRS bases your child’s eligibility on their age on Dec. 31, 2021, so a 5-year-old turning 6 in 2021 will qualify for a maximum of $250 per month. For both age groups, the rest of the payment will come with your 2021 tax refund when you claim the remainder of the credit in 2022.

If you have a dependent who is 18 years old, they can qualify for $500 each. Dependents between the ages of 19 and 24 may qualify as well, but they must be enrolled in college full time. Here’s more on the financial details for qualified dependents.

Can parents of babies born anytime in 2021 get the child tax credit payments?

If you have a baby in 2021, your newborn will count toward the child tax credit payment of $3,600. Children who are adopted can also qualify if they’re US citizens. You’ll be able to update the IRS on a new dependent once that aspect of the Update Portal is available.

If the IRS overpays me, will I have to pay the money back?

Since the IRS uses your 2019 or 2020 tax return, your family may not qualify for the child tax credit payment when you file your 2021 tax return in 2022. In this case, you may have to repay the IRS some or all of the credit. The child tax credit rules aren’t as flexible as the stimulus check rules regarding overpayment. One example of when this would happen is if you and the other parent of your child (who is not your spouse) were both paid for the child tax credit for the same dependent.

To avoid this tax inconvenience, make sure all your information is updated before the payments start arriving. The Update Portal will let you make adjustments in the coming months to verify your new income and marital status.

If I don’t file my taxes, can I still get child tax credit checks?

Payments will be automatic for those who filed their 2020 tax returns by the May 17 deadline (or those who claimed all dependents on a 2019 tax return). Parents who didn’t file taxes should use the new IRS tool, called the “Non-filer Sign-up tool,” to get their money, even if you’re not usually required to file. This will let the IRS know your income level and how many dependents are in your household who count toward the child tax credit benefits.

You could also file a tax return to get the full monthly child tax credit payment you’re owed.

How do child tax credit payments work if I have joint custody of a kid?

For the first two stimulus checks, some parents who shared custody of a child but weren’t married to each other were entitled to each claim money for the same child. That was only if they alternated years for claiming the dependent — in other words, if one parent claimed the child on their taxes in odd years and the other claimed the child on their taxes in even years.

This is no longer allowed for the third check, and we’re told it won’t work that way for the child tax credit payments either. Here’s what we know so far about child tax credit and shared custody situations.

If the child switches homes this year, the parents will need to agree on who will claim the child on their taxes this year. The parent that claims the child and receives the child tax credit payments will need to fill out Form 8332 and include it with the tax return. If you don’t qualify or want to get the money in one lump sum, you can also opt out of early payments. Remember, if you’re not eligible but receive the money, you may have to pay the IRS back during tax time.

Will monthly child tax credit checks have an effect on my 2022 taxes?

If you’re eligible for advance payments and choose to get the extra cash this year, you’ll receive the second half of your total on your taxes next year. You’ll need the total amount of child tax credit money received in 2021 to compare it with how much you can claim. The IRS will send a letter with your personalized estimate; you’ll need it for your 2021 tax return. You may have to repay the IRS if you got more than you were supposed to.

On the other hand, if you opted out of early child tax credit payments you’ll get the money in one lump sum.