If you need to opt-out of the child tax credit, the deadline to do so is Oct. 4 by 11:59 p.m. EST. If you have not voluntarily set up child tax credit payments, but meet the income thresholds, it’s likely you’ve been receiving monthly child tax credit payments via direct deposit into your bank account since July.
This year as part of the Advance Child Tax Credit stemming from the stimulus relief bill, all eligible families with children under six years of age will receive $3,600 per qualifying cold, granted they meet the income thresholds. These thresholds are generally $75,000 and under filing single or $150,000 filing jointly. This credit is based on your 2019 or 202 tax return, and the IRS automatically determines if you were eligible or not. The IRS notified all eligible recipients via mail over the summer, but should you have missed the letter, it is possible money has been deposited into your account each month since July.
Half, $1,800, of the full benefit will be deposited via 6 monthly payments lasting through December, and the other half will be available to be claimed next year during tax time. Although to receive the full benefit you need to meet the income threshold, there is a phaseout schedule up to $400,000 for joint filers. This means that even if you make $400,000 filing jointly, you could be receiving even a small amount of this credit.
Should that be the case, and you exceed the income threshold with your 2021 income, you may have to pay the money back once the IRS works through your taxes next year.
If you are concerned you may exceed these limits, you have until Oct. 4 to opt-out, and can do so here through the IRS online portal. You can opt-out as well as update income information so the IRS does not continue payments and can also have the information on file for next year’s settlement. The other half of the benefit that you would have been scheduled to receive will simply be removed from your return as the IRS will automatically deem you ineligible without you having to do anything further.
If you still want to receive the credit, you don’t have to do anything. But if you have not received a deposit because you didn’t file your taxes, it’s not too late to get the money. By filing your 2020 taxes before Nov. 1 you will receive the child tax credit in two lump sums. Filing by Nov. 29 will get you the full portion of the credit in one deposit. Don’t forget, your 2021 baby qualifies you to receive the credit, so if you gave birth or adopted a baby this year, you should be sure to file your taxes.
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