CHILD tax credit payments have been distributed to eligible families this week but you may want to opt-out of these benefits going forward.
Despite receiving monthly checks that could bring financial relief to your family into 2022, you can end up having to pay the IRS back if you receive money you don’t qualify for.
Benefits of unenrolling from monthly payments
There are a few reasons why it may be a good idea to opt-out of receiving advance payments.
- If you are saving up for a big expense or owe a big sum of money, one payment could be useful.
2. If you anticipate a change in your household income, you won’t have to deal with updating your portal.
3. If your household income goes up or if a dependent ages out, the IRS may overpay you and you will have to send money back if you don’t update your tax information.
How to opt-out of monthly payments?
According to the IRS, you must unenroll three days before the first Thursday of the month to not receive the following month’s payment.
How to unenroll:
- Use to Child Tax Credit Update Portal and click Manage Advance Payments
- Sign in using your IRS or ID.me account that could be set up if you don’t have one. To set up, you will need a photo ID, your Social Security number and smartphone or tablet to verify your identity and an email address
- Next, you will be able to unenroll from the monthly payments, and your eligibility
Additional steps for married couples
You and your spouse each will need to unenroll from the child tax credit payments if you are married and file jointly.
The IRS said that you will get half of the payment you were supposed to receive if only one individual unenrolls.
What if you opt-out and want to file taxes in 2022?
You will receive your full payment late if you choose to turn down this year’s child tax credit installments, which amounts to half the total.
You will not receive your full payment until next year if you unenroll from monthly child tax credits for the remainder of 2021, which can be used to pay off taxes you owe then.
You will get six payments of $300 and another $1,800 tax refund next year if you decide to receive monthly payments.
What if you want advance child tax credit payments but don’t file taxes?
You would have automatically received payments starting July 15 if you filed your taxes before the May 17 deadline.
You can register to receive payment through an online IRS portal if you do not normally file income taxes.