Taxpayers Now Can Opt To Delay Payment of Child Credit

Husband and wife holding baby and looking at laptop.

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The IRS on Tuesday launched two new online tools for taxpayers to manage their child tax credit payments, including one for those who’d rather receive the entire amount of their credit at the end of the year instead of collecting half of it as monthly payments starting next month.

The new tools allow taxpayers to view their eligibility for their payments and to unenroll from receiving them in advance. The unenrollment tool is meant for taxpayers who do not want to receive the advance credit for various reasons, including the possibility of having to pay it back if their eligibility to receive it changes. Examples of those whose eligibility could change include divorced parents who are unsure of custody status and people whose income increases this year compared to last. The second tool—the new “eligibility assistant”—asks taxpayers a series of questions to help determine whether or not they qualify for the credit.

The tools are the latest aids the IRS has introduced to help taxpayers navigate changes to the child tax credit, which is vastly different in 2021 than it was a year ago, after being significantly overhauled as part of the American Rescue Plan pandemic relief bill. The new credit pays tax-filers up to $3,600 per child depending on the age of the child and the income of the taxpayer, compared to $2,000 previously.

The IRS also will deliver half the value of the credit as monthly payments this year starting on July 15, based on information the IRS has on file from 2020 or 2019 tax returns, with the remainder being counted as a credit at tax time, as it traditionally has been. The changes to the credit are only for 2021, although Democratic politicians including President Joe Biden hope to extend them.

The unenrollment tool is part of an “update portal” that will gain new functions later this summer and fall, including letting people view their payment history and adjust their bank account information or mailing address, according to the IRS.

In addition to the unenrollment tool and the eligibility tool, another allows people who don’t normally file taxes (usually because of having low incomes) to sign up for the payments. The government has targeted these non-tax-filers with a publicity campaign encouraging them to sign up for the credit, with Biden declaring Monday as Child Tax Credit Awareness Day.

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