COVID-19: Advance Child Tax Credit Payments
Know Your Options for Advance Child Tax Credit Payments
Chances are, your family is one of the more than 39 million households that began receiving advance child tax payments from the IRS in July. For many families, these payments have provided a welcome addition to their income streams, helping to pay for expenses like childcare. Payments of up to $300 per month for 6 months represent the largest child tax credit to date, and are a source of relief to many, stemming from expansions to the American Rescue Plan Act that was signed into law by President Biden in March.
The Plan expands the CTC for tax year 2021 only, with distributions of periodic payments. Effective July 15, the IRS began paying half the total credit amount in advance monthly payments over a period of six months. As with Economic Impact Payments (stimulus checks), the IRS calculates and automatically sends advance payments to those who are eligible.
Can I Opt Out of Receiving Payments?
The payments are an advance to the Child Tax Credit that would normally be paid out when taxes are filed, so folks may not have as much of a tax credit to offset their income when they file taxes in 2022. Some families would prefer to opt out of receiving advance monthly payments, and instead receive a one-time payment at tax time. Your tax advisor would be a good resource for understanding whether or not this is the right direction for you. The good news is, eligible families may opt out of all or some of the advance payments through the IRS's Child Tax Credit Update Portal.
Although payments started in July, there are chances each month to opt out in advance of future payouts. The remaining opt-out deadline dates are:
- Opt out by August 30 to avoid receiving the September payment.
- October 4 for October payment.
- November 1 for November payment.
- November 29 for December payment.
Be sure to visit the Child Tax Credit Update Portal for more details.