The time is here for parents to decide if they want to receive the first automatic child tax credit advance payment, expected to go out July 15.
Parents have until 11:59 p.m. Eastern Time on June 28 to opt out of the initial payment. They can do so online using the Internal Revenue Service’s child tax credit portal, where they can check eligibility and advance payments, or unenroll from advance payments. Users will need their existing IRS username or ID.me account, or enroll for one using a photo ID.
As part of the American Rescue Plan pandemic relief bill, the child tax credit was significantly increased and overhauled for 2021. Not only is the maximum credit much bigger than the $2,000 for 2020 (up to $3,600 per child under 6 and $3,000 for those 6 to 17 for those under certain income limits), but half the funds will be given as an advance, ahead of the filing season for 2021 tax returns.
Opting out of each payment this year must be done by at least three days before the first Thursday of the payment month before midnight Eastern Time. Parents who are married and filing jointly must both unenroll.
Except for those who opt out, the IRS said 39 million households with 65 million children will automatically receive monthly installments of up to $250 or $300 per child, depending on age, starting July 15 via direct deposit, check, or debit card.
Although receiving a monthly check for each child sounds great, there are reasons people may want to opt out. For example, because these credits are paid in advance, each dollar received will reduce the amount of Child Tax Credit you will claim on your 2021 tax return. That means any refund you might receive could be reduced, or the amount of tax you owe may increase. You could avoid owing tax if you unenroll and claim the entire credit when you file your 2021 tax return, the IRS said.
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