Should I Opt-Out of the Advanced Child Tax Credit Payments?
The IRS is continuing to update its website related to the Advanced Child Tax Credits that will be sent out beginning July 15th. There is some important information relating to whether or not you should opt out of these advanced payments. Check out their FAQs here: https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-j-unenrolling-from-advance-payments.
Per the IRS "If you receive a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment." It is important to do some tax planning work now. The first opt-out option ends at 11:59pm on June 28th (see image below). In addition for those that file married filing joint returns, you will each need to opt-out as the IRS tracks your information by each individuals social security number. So if you opt-out, but your spouse does not or forgets to, you will still receive half of the advanced payment until you both opt-out.
Once you opt-out, at this time, you cannot re-enroll. So please make sure you absolutely want to opt-out of the Advanced Child Tax Credit payments.
It is always good to talk with a professional to determine what is the best strategy for your tax situation. Please also check this link often as the IRS is updating the Advanced Child Tax Credit payments often: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.
Samantha M. Besnoff, CPA has been in the accounting field for over twenty-five years and is known as Your Financial Maven. Check out her information here: www.yourfinancialmaven.com.