Households can choose out of kid tax deduction beginning July 15
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The IRS launched an online tool on Tuesday that families can use to notify the agency that they do not want to receive monthly prepayments from the extended child tax credit due to begin next month.
With the new portal to update the child tax credit, families can verify that they are eligible for the credit and opt out of the advance part, i. Instead, they will receive the entire credit as a lump sum when they file their 2021 tax return next year.
The expanded child tax credit was part of the US bailout plan put into effect by President Joe Biden in March. The credit increases from $ 2,000 per child under 17 years of age to $ 3,000 and offers an additional $ 600 benefit to children under 6 years of age for the 2021 tax year.
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Monthly child tax credit payments begin on July 15. What you should know
Full credit is available to all children under the age of 17 in families with Adjusted Gross Income less than $ 75,000 for a single parent and $ 150,000 for a married couple in 2020 or 2019, and ends for individuals earning $ 95,000 and married couples, who jointly file $ 170,000 while still eligible for the regular child tax credit.
Why some families can unsubscribe
For some families, getting half of the credit in monthly prepayments makes sense, especially for those who may owe the IRS and want to use the credit to offset a tax bill.
In addition, some families with separated parents who share custody may take turns each year as to who claims children from their taxes. If the parent who applied for dependents in 2020 (or 2019) is not the one who is applying for dependents in 2021, they can opt out to make sure the credit goes to the correct guardian.