Here's What You Need to Remember: Be aware that these payments are based off the agency’s estimates on available data—which can include overall income, marital status, and number and age of qualifying dependent children.
That $1.9 trillion stimulus bill enabled the expansion of child tax credits that generally allowed families to claim a credit of up to $2,000 for children under the age of seventeen. Amid the ongoing pandemic, however, these benefits have been branched out to include even more families—and they are now eligible to collect as much as $3,600 per year for a child under the age of six and up to $3,000 for children between ages six and seventeen.
This all means that millions of cash-strapped parents can tap into a $250 or $300 cash windfall each month through the end of the year.
“The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children. … This tax cut sends a clear message: help is here,” Biden said in a statement.
In an effort to make the disbursement of the child tax credits as smooth a process as possible, the Internal Revenue Service has announced that it will launch two portals for the general public by July 1.
These portals can be used to update and adjust personal financial information and any changes to child dependents or to opt out of the monthly payments altogether if a taxpayer chooses to do so. If one takes this route, they could be in line to receive one lump sum next year.
“Eligible taxpayers who do not want to receive advance payment of the 2021 Child Tax Credit will have the opportunity to decline receiving advance payments,” the IRS recently stated.
“Taxpayers will also have the opportunity to update information about changes in their income, filing status or the number of qualifying children. More details on how to take these steps will be announced soon,” it added.
Added IRS Commissioner Chuck Rettig: “We will make forms and instructions for the forms available for folks who want to opt out.”
One of the more popular reasons for opting out is due to the fact that some families would rather not deal with an overpayment of the credits, which they will be responsible for paying back during tax season next year.
Know that such a situation could potentially occur because the IRS is directed via Biden’s legislation to issue advance payments of the child tax credits in periodic installments.
Be aware that these payments are based off the agency’s estimates on available data—which can include overall income, marital status, and number and age of qualifying dependent children. But if the IRS uses any outdated or inaccurate data, that could trigger an overpayment of the benefits that will eventually need to be paid back.
Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn. This article first appeared earlier this year.