Apparently, you can opt out from the Child Tax Credit monthly payment and instead receive the money in one lump sum. However, you need to make the decision before July 15.
Starting July 15, the first child tax credit payment will be distributed to eligible families with qualifying dependents. The $3,600 budget per eligible child will be broken down to around $250 to $300 monthly payments depending on the filing guardian's adjusted gross income (AGI) and the dependent's age. Checks will continue to be disbursed monthly during the 15th. More details on the breakdown of monthly payments for the child tax credit are available here.
$3,600 Per Child in One Lump Payment
Each eligible child is entitled to receive the following monetary support: Ages 5 and younger up to $3,600, Ages 6 to 17 up to $3,000, Age 18 receives $500 one-time check, and Ages 19 to 24--like college students--have a $500 one-time check. Note that if the guardian filing has a high AGI, $50 is phased out for every $1,000 of the filer's income over the threshold amounts.
To receive these child tax credit payments in one lump sum, you need to also opt out from receiving the monthly payment. Three reasons why you could opt out from monthly child tax are as follows:
- You can receive your Child Tax Credit payment in lump sum next year
- You are concerned that IRS will accidentally send you an overpayment and charge the money back
- You do not want to update your information portal in the IRS
How to Opt Out of the Monthly Payments
Remember that you will not receive any other payment when you opt out from receiving the monthly child tax credit payments until after IRS completes the processes for 2021 tax returns next year. After that, the full payment, or lump sum, will be released together with your tax refund.
To opt out of the child tax credit monthly payments, Cnet reported that you will use the IRS portal. Starting July 1, the IRS website would be opening two portals in relation to the child tax credit payments. One will monitor the monthly payment release, and the other will monitor families who opt out of the service. Cnet noted that the IRS will provide digital forms and paper forms for the process. However, no further instructions or details to the new program were provided.
Although the new process has not been announced, IRS ensures to deliver the money it owes you based on your updated record. This would include changes that happened since you last filed your taxes-for example, getting a new baby born in 2021 or a sudden change in your income. IRS would require you to update your forms before it could release your money.
Remember to make your decision before the start of July. When the child tax credit payments start being distributed, it might not be easy to opt out of the program.
Related Article: Fourth Stimulus Check Tracker: $2000 Payment Update, Online Petition and More