Families that aren’t required to file may get the monthly payments faster by using the I.R.S. non-filer tool, because “it may take time to process their return,” David DuFault, an estate planning lawyer with Sodoma Law in Charlotte, N.C.
Congress approved the expanded 2021 child tax credit in March as part of the Biden administration’s economic relief legislation. The size of the credit depends on a family’s income, the number of children and their ages. For now, it applies to 2021 only, although President Biden and some members of Congress hope to extend it for years.
Getting part of the credit as monthly payments is a boon to low-income families, which often struggle with fluctuating incomes, said Timothy Flacke, executive director of Commonwealth, a nonprofit group that focuses on financial security.
“This is a really, really big deal,” he said. “They can make financial plans around it.”
The payments will be made on the 15th of each month through December, except for August (when it is scheduled for the 13th because the 15th falls on a weekend). The monthly payments cover half of a family’s estimated child credit; the other half will be paid next year when the family files its tax return.
Some families, however, may not want to get part of the credit early. For them, the I.R.S. has set up another special website, called the “child tax credit update portal,” where recipients can “unenroll” from the advance payments. (To skip the July payment, recipients must opt out by Monday.) Users must take steps to verify their identity before using the tool because it allows access to sensitive personal and financial information.
Why would someone opt out? Say a family qualifies for the credit based on its 2020 income but doesn’t expect to be eligible in 2021 because of higher earnings or a change in the number of qualifying children. If it doesn’t opt out, that family may have to repay some or all of the money it receives this year or get a smaller refund when it files its tax return in 2022.
(People with low incomes — under $40,000 a year for unmarried taxpayers and $60,000 for married couples — generally won’t have to repay advance payments if they are ineligible in 2021 because of a change in the number of qualifying children, according to a report from the Congressional Research Service.)
Source: | This article originally belongs to Nytimes.com
