Monthly child tax credit payments: Why you might want to opt out

Starting this week, the first of six child tax credits will hit parents’ bank accounts.

The first payment goes out Thursday, July 15. These payments will continue every month through December and then parents will get the rest of the money on their next tax return.

APPLY: Child Tax Credit Update Portal

Parents of children age 5 and younger will get $3,600 per child or $300 per month. Parents with children ages 6 to 17 will get $3,000 per child or $250 per month. But you only qualify if you are a single parent and make less than $75,000 a year or less, or file jointly making $150,000 or less.

While some families may need the money right now, others might want to opt out so they don’t end up owing the IRS next year.

Why?

One reason is that if you don’t need the money right now, then you can receive the full refund come tax season next year.

For some families, you may have to pay the money back in 2022. If you are making more money this year in 2021 than you did on your last tax return, you may have to pay some of the child tax credit money back at tax time next year. If you had a 17-year-old child on your last tax return who turns 18 this year, they may not be eligible for the tax credit. That will be reflected on next year’s taxes, and whatever payments you already received may have to be returned to the IRS.

It is too late to opt out of the first payments set to hit accounts this week. The next deadline if you want to opt out is Monday, Aug. 2. However, once you opt out, you’re opted out for good, you can’t opt back in.

To opt out, visit the child tax credit portal on the IRS website.

Deadline to unenroll

Source: IRS