The third installment of the advance monthly payments of the Child Tax Credit is set to hit the bank accounts of millions of Americans on Sept. 15. The July and August payments have already been distributed, but if you feel you need to opt out or unenroll for any reason, the deadline to do so is Aug. 30.
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Each month you have the opportunity to opt-out or unenroll from future payments. If you feel that your income situation might change or that the age of one of your dependents will phase you out of the amounts you are currently receiving, it might be a good idea to opt out. Continuing to receive payments regardless of new income or older dependents can cause a hefty tax bill come next year.
Current Child Tax Credit payments are based on your 2019 and 2020 tax returns which means that your payments could be sent based on information from almost three years ago at this point. The income threshold is $75,000 and under filing single and $150,000 filing jointly. The full amount of the benefit will be paid for each dependent child under the age of 6 to families who also fall underneath these income thresholds.
During the pandemic, incomes and employment situations drastically shifted, and the tax credit was designed to alleviate some of this burden. With economic recovery now seemingly on track and the labor market in full swing, it is probable your income has or will change if your position was affected by the pandemic.
If in 2021 your income surpasses or WILL surpass the income thresholds listed above, it might be a good idea to opt out of the child tax credit payments. Let’s say for example you recently got a job, so you might not make the entire amount of your salary before year’s end. If you are unsure whether or not this will affect you, it might be a good idea to opt out anyway. If the IRS determines that you are above the thresholds, you will be required to pay back any amount of payments you have already received.
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