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IRS launches tool to help parents opt out of child tax credit payments

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WHAT YOU NEED TO KNOW:


  • The Internal Revenue Service (IRS) unveiled an online portal where US families can choose to opt out from receiving the advance child tax credit payments.
  • The portal can be accessed via smartphones or computers.
  • The IRS will update the tool in the coming months to provide broader functionalities.

On Tuesday, the Internal Revenue Service (IRS) launched an online tool that would enable families to waive the advance monthly payments from the enhanced child tax credit which will roll out in July.

The agency introduced the new Child Tax Credit Update Portal, where families could be made aware that they are eligible for the credit, giving them the option to disable the advance payment option. This would mean that they would not be receiving monthly payments starting July 15 up to December. Families that would opt out for advance payment would instead receive the entire credit in lump sum next year after filing for their 2021 tax return.

Accordingly, the full payment will be available for families with children aged 17 and below, with 2020 or 2019 adjusted annual salary of lower than $75,000 for single parents and $150,000 combined income for married couples. Meanwhile, individuals with $95,000 earnings and couples with a combined $170,000 income could still qualify for the regular child tax credit.

Waiving the advance monthly payments could enable families with outstanding balances to the IRS to use it in offsetting their tax bill. In another instance, children with parents who are separated but engage in shared custody can alternate the claiming of tax credit for every year such that the present guardian could be the one to claim it.

On the other hand, taxpayers, who qualified for 2020 or 2019 but now have a 2021 salary higher than what was stated, should opt out from the payment so that they would no longer have to return it back for their upcoming filing of tax. The IRS also noted that families who lived outside the country or planning to leave for over the half of this year should opt out from receiving the payments.

The online tool can be used thru computer or smartphone. Families who have no access to the internet or unable to reach the portal for other reasons could just call the agency to unenroll.

In the following months, the agency will also improve the tool that would allow families to view their payment history, and update their details like bank information and mailing address. A Spanish version will also be made available, the agency said.

Last March, President Joe Biden signed the American Rescue Plan into law where the enhanced child tax credit is included. From $2,000, the credit has increased to $3,000 per minor aged 16 and below, and an additional $600 cash benefit for children aged 5 and below for the 2021 tax year.

Source: CNBC.com

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