Did you receive a child tax credit notice in the mail and wondering whether to receive the payments now or opt-out?
Delaying your Child Tax Credit now instead of receiving monthly payments throughout 2021-2022, means you can receive a larger lump sum after the IRS processes your 2021 tax return.
You should receive monthly installments of up to $300 per child every month from July to December for a total of $1,800 per child and claim the remaining $1,800 credit when you file your taxes in 2022. Overall, you’ll be receiving the same amount, but delaying when you receive it.
Waiting to receive the Child Tax Credit could help you avoid a surprise tax bill.
Your Child Tax Credit eligibility is based on your 2020 income and your 2021 income may change. If your 2021 income exceeds the eligibility requirements, you’ll need to pay back any overpayment when you file.
Opting out limits the risk of an accidental IRS overpayment. By opting out of the Child Tax Credit, you won’t have to worry about paying that money back next year because you’ll receive the total amount of $3,600 with your tax refund, or the credit can be used to offset any taxes you may owe at the time.