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As many of you know, the monthly child tax payments began arriving July 15.  Every dollar you receive from July to December will reduce the amount of credit you'll claim on your 2021 return.  If you don't need the money this year, you may be better off taking the full credit on your 2021 tax return to lower next year's tax bill or increase the amount of your tax refund.  Taxpayers need to remember that the child tax credit offset the amount of taxes owed on your annual federal tax return.  By receiving the advance child tax credit, some taxpayers may end up owing taxes when they file their 2021 returns because their child tax credit will be reduced by the amount of advances received.

For example, a family with 3 dependents between the ages of 7-17 would normally have a credit of $6,000 on their tax return.  in 2021, the total credit would be $9,000.  However, they will receive 50% of the credit in advance leaving a credit of $4,500 to offset any taxes owed instead of the normal $6,000 reported in prior years.  This is a $1,500 swing in taxes owed or refunded when compared to prior years.

If you want to stop advance payments of the 2021 child tax credit, you have to opt-out using the IRS online tool before the monthly deadline.  To access the online tool, go to www.irs.gov and then click on "Get Details on the Advance Child Tax Credit".  You will then click on "Manage Payments" to unenroll and to stop future payments.

There are monthly opt-out deadlines if you want to cut off payments before the next one arrives.  To Opt-out before you receive a certain monthly payment, you must unenroll by at least three days before the first Thursday of the month in which that payment is scheduled to arrive.  The full list of opt-out deadlines can be found in the table below (note that the deadline for opting out of the first payment has already passed).

OPT-OUT DEADLINES FOR MONTHLY CHILD TAX CREDIT PAYMENTS

PAYMENT DATE                     OPT-OUT DEADLINES

JULY 15, 2021                               JUNE 28, 2021

 AUGUST 13, 2021                        AUGUST 2, 2021               

SEPTEMBER 15, 2021                 AUGUST 30, 2021

 OCTOBER 15, 2021                    OCTOBER 4, 2021

NOVEMBER 15, 2021                  NOVEMBER 1, 2021

DECEMBER 15, 2021                 NOVEMBER 29, 2021

If you miss the deadline and you're eligible for a monthly payment, you'll continue to get scheduled payments until the IRS processes a request from you to unenroll from the monthly payment process.  If you do not opt-out of the monthly payments now, you won't be able to re-enroll until at least September 2021.

If you're married and file a joint tax return, your spouse also needs to opt-out since unenrolling only applies on an individual basis.  If your spouse doesn't unenroll, you'll still get half of the joint payment you were supposed to received with your spouse.

For those that are starting to receive your advanced child tax credit payments, please keep track of what you receive each month as your tax preparer will need that amount when they prepare your return next year as it will reduce your child tax credit on your 2021 Tax Return.

If you have any questions, do not hesitate to call or email

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