Use This Tool to Get Money Off Your Child Tax Credit
The IRS yesterday launched a new portal to help you manage upfront payments on the recently expanded Child Tax Credit of up to $ 3,600 per child. The tax credit is tricky as it is based on your projected income for 2021, so you will want to use the portal to update your income and child dependent status (or opt out if you would prefer to receive a one-time credit when applying for your taxes). Here’s what you need to know.
How much does the Child Tax Credit cost?
The Salvation of America Act has raised the child tax credit from $ 2,000 to $ 3,600 per child (although the rate depends on your income), with half of that amount going to be sent in advance payments on the 15th of each year. one month before the end of the year in the form of a check or direct deposit.
These upfront payments are a maximum of $ 300 per month for each eligible child ages 5 and under and $ 250 per month for children ages 6-17. This Lifehacker post has more details on how income thresholds work.
What does the Child Tax Credit Update Portal do?
At this point, the Child Tax Credits Update portal will verify your eligibility to receive payments and allow you (if you wish) to opt out of receiving monthly payments. However, according to CNET , the portal will also be updated this summer so that you can update your bank account information and mailing address, and most importantly, update your income or child custody status .
Why is it important? Well, since upfront payments are based on estimates using your 2019 or 2020 income, your actual 2021 income may be different from what the IRS thinks. For example, you may get a raise this year that will strip you of your credit eligibility, which will force you to pay your advance payments later when you file your 2021 tax return. On the other hand, you may have a child in 2021, which entitles you to receive more money as part of your upfront payments. By continually updating your income and child dependent status, you can claim the money owed to you – no surprises.
The opt-out option may be a good idea if you already know that your 2021 income will deny you eligibility for advance payments, or if the other parent is already claiming your children as dependents.
Two other tools for kids tax credits to be aware of
The IRS also launched the Child Tax Credit Eligibility Assistant yesterday, a questionnaire-style tool to help you determine if you are eligible for advance payments of Child Tax Credits .
In addition, because the IRS uses the income shown on your previous tax returns to determine if you are eligible for child tax credit, the Non-Filing Registration Tool was created for low-income individuals who do not normally file their tax returns. … (this is not necessary if you make less than $ 12,000). For more details on how this tool works, read this Lifehacker post .