Consumer Alert: Uncle Sam’s advance child tax credit payments may cost you. Here’s how to opt-out.
Editor’s note: This story has been updated to clarify how the unenrollment process works.
ROCHESTER, N.Y. (WHEC) — Today’s consumer alert concerns a government gift you may want to give back. And 11:59 p.m. on June 28, 2021, is the deadline to take action.
First, let me explain how this gift works. When Congress passed the American Rescue Plan earlier this year they increased your child tax credit from $2,000 to $3,000 per child 6 to 17. It’s $3,600 for children under six. This applies to individuals making $75,000 less and couples making $150,000 or less. Part of the deal is that you will be paid half your 2021 tax credit this year in monthly payments starting on July 15.
So let’s say you’re a family of four you have two school-aged children. At $3,000 per pipsqueak, your tax credit is $6,000. The government is paying you half that amount this year. So on the 15th of every month, starting in July you would get $500 per month. That’s $3,000 dollars by the end of the year. You get the other half when you file your 2021 taxes.
But your child tax credit is reduced by $50 for every $1,000 over the income limit. Remember for a couple that limit is $150,000. Let’s say that same couple with two school aged-children has a household income of $160,000. Their income is $10,000 over the limit. So you multiply $50 by 10 and you get $500. You then subtract that $500 from $6,000. That couple is getting $5,500. The IRS has a tool to help you calculate how much to your child tax credit will be but you have to do the math yourself.
Kiplinger and c/net have far more consumer-friendly tools.
But let’s stay with that couple. What if mom got a raise in 2021 or Dad was unemployed in 2020 but got a new job in 2021. Now they’re in a higher tax bracket, and now they owe money. Well, guess what? The IRS may want that advance child tax credit back. Every dime. How much that couple would have to pay back would depend on how much they owe. So if there’s a chance that you may owe the government when you file your 2021 taxes, you need to opt-out of that advance child tax credit. Tell Uncle Sam now to keep his money. And today is the deadline to do that. The IRS calls it unenrolling. You have until 11:59 p.m. on June 28 to unenroll from those monthly advance child tax credit payments. And you have more opportunities to unenroll. Here’s the schedule.
CHILD TAX CREDIT PAYMENT UNENROLLMENT DATES
|Payment month||Unenrollment deadline||Payment date|
|July||June 28||July 7|
|August||Aug. 2||Aug. 13|
|September||Aug. 30||Sept. 15|
|October||Oct. 4||Oct. 15|
|November||Nov. 1||Nov. 15|
|December||Nov. 29||Dec. 15|
Just click here and scroll down to the blue button that says “Unenroll from Advance Payments”
And don’t wait until the last minute. You may need to upload a picture of your license to verify your identity, so give yourself some time to walk through the steps.