The advance payments for the enhanced child tax credits are set to start soon. Around 36 to 39 million families are up for the payments and the IRS has launched two new online tools. It will help taxpayers wade through this tax law change. And with the stimulus check payments drying up, the Child Tax Credit is the closest that we are to getting a fourth stimulus check.
The new tool will help families decide if they are in line for the child tax credit payments. It will also help them enter the latest details on their family status.
The Child Tax Credit is generally adjusted with your tax return. The current payments set to start in July are an advance on the 2021 tax returns. But under the American Rescue Act, the administration increased the amount of the CTC and included a provision that makes half of the credit available as an advance payment. 50% of the total amount will be paid out between July and December 2021.
Get Help On Your Stimulus Checks Through The 3 New Portals
Two of the portals, the CTC Non-filer Sign-up Tool, and the CTC Update Portal is aid with your payments. Then there is the interactive tool, the CTC Eligibility Assistant that informs you of your eligibility.
The Eligibility Assistant helps taxpayers find out if they are eligible for the advance payments. And once you are sure you’re eligible, you either file the 2020 income tax return or sign up for the Non-Filer Sign-up Tool.
The Child Tax Credit Update Portal on the other hand lets taxpayers verify their eligibility for the payments and also opt-out, or unenroll from receiving the monthly payments. The Update Portal is a vital tool among the three newly available on irs.gov. It helps families to understand, register for and also monitor the CTC payments, said Charles Rettig, the IRS Commissioner.
Why Would Anybody Want To Unenroll?
With no sign of a fourth stimulus check, the idea that anybody would want to unenroll or opt-out of the Child Tax Credit payments might seem confusing as they are might seem like a surprise stimulus check. But you are not opting out of the entire stimulus check process. You might, for instance, want the entire Child Tax Credit when you file your 2021 income tax returns.
You should also unenroll if you find that your income is much higher than the threshold limit for the payments. If another family member or your ex-spouse claims the amount for your child as a dependent in 2021, you should also opt out to avoid complications later. Another reason for opting out is if your main house has been outside the US for over half of 2021.
Getting the full credit as a complete stimulus check of around $3,000 or $3,600 might seem a better option for some than the monthly payments between $250 and $300. And this is just for one child.
It is vital to understand that the Child Tax Credit payments are not stimulus checks but are essentially tax credits on your 2021 returns to be filed in 2022. So if you are not in line for a refund, then accepting the advance payments will cause you to owe more when you file your tax returns next year.
This could be disadvantageous for those who have switched to a high-paying job, or if their spouse went back to work after a prolonged period of unemployment in 2020. You will be in a higher tax bracket and opting out of the Child Tax Credit would be a saner option.
Moreover, if you have sold any property and your income went up substantially, you might have to pay back the credit payment when you file your 2021 income tax returns.
So it would be prudent not to opt for the Child Tax Credit payments under such circumstances, and even if you do not unenroll, you should set aside as much of the monthly installment of the Child Tax Credit payments till you calculate your final tax return for 2021.
Other Updates Lined Up For You
There are other updates on the cards. For instance, you will soon be able to look up the status of your payment. You will even be allowed to update bank account details in June. That will help receive online payment set to start in August.
You will also get to update your mailing address at the beginning of August. Other updates that you will be permitted include changing your family status and changes in income.
You might be in line with the letter sent by the IRS saying you are eligible for the Child Tax Credit. A second letter could follow that will formally notify you of the amount that will be coming your way.
Qualifying For The Child Tax Credit
Couples will receive the Child Tax Credit payments if their earning are up to $150,000 and the children are under 17 years. For single parents, the income threshold is $75,000.
The payments will come in automatically without your intervention if the IRS has all the required details including your latest income details, your bank-related information, and your latest postal address.
But if you are a non-filer and have not filed your 2020 income tax returns, you have the option of the IRS tool for updating the agency with all the details necessary for sending the Child Tax Credit stimulus check.
So you have the option of updating past payment details, make changes to your bank account, or information if there has been an address change. So if you have welcomed a new baby in 2020, you can quickly update the information through your computer or smartphone.
Using The IRS Portal
You can confirm your eligibility for the payments and also enter your preferred mode for receiving your payments. You should register on the site and confirm your identity. You are then good to go as far as the portal is concerned.
The stimulus check amounts are drying up and if you feel that you need payments immediately and you can’t wait until the start of the Child Tax Credit payment, there are a few options that could save you considerable money.
The pandemic has forced many families and individuals to rely on their credit cards for immediate expenses. You could now opt to roll these high-interest payments into a low-interest loan. You could end up saving hundreds of dollars every month on low-interest rates and an extended duration of repayment of the loan.
With insurance rates at an all-time low, it is time you shopped for a better deal for your insurance. Car insurance and home insurance are areas that you might want to look into for a great bargain that could save quite a bit every month.
With mortgage rates at their lowest, you can go in for refinancing options that could save you thousands in the long run. Long-term home loans have bottomed out at 3%, and millions of homeowners are in line for reaping the benefits.
