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Advance Child Tax Credit

 

Advance Payments for the Child Tax Credit

The IRS made some important changes to the Child Tax Credit, which includes an advance payment of the credit. The payments will begin July 15, 2021, unless you opt out.

This advance payment is an advanced tax credit not a stimulus payment and may already be figured in as part of your withholding for tax purposes.

This is important because if you receive this tax credit prior to filing your tax return you will most likely have an amount due at the end of the year equal to your advance credit.

If you receive more than you are allowed you may have to repay the excess amount. Additionally, there are some cases you may not want to receive these early payments:

  • A qualifying child who resided with you may change homes during 2021 and reside more than half of the 2021 tax year with a different individual. Someone else (an ex-spouse or another family member, for example) qualifies to claim their child or children as dependents in 2021
  • Your income increases in 2021.
  • Your filing status changes for 2021.
  • Your main home was outside of the United States for more than half of 2021.

 

                         Advance Child tax Credit Payments in 2021 – Link to main page:                                  

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

Link to CTC UP (Child Tax Credit Update Portal) in 2021    

                                               https://www.irs.gov/credits-deductions/child-tax-credit-update-portal                 

You will need to create an account if you do not already have one with the IRS. You are asked to verify your identity to create this account, and they request you have your photo identification ready. Be prepared for any of the following:

  • Using Desktop and/or Phone
  • Camera Accessibility (taking a picture / scanning)
  • Providing other documentation
  • Phone Conference (if applicable)

Frequently Asked Questions https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-frequently-asked-questions

Payments are calculated based on your 2020 income tax unless it has not been processed, then it will be calculated based on your 2019 tax return.

If you do receive these payments, the IRS will send you Letter 6419 in January of 2022. Please provide this with your tax information to prepare your 2021 tax return.

If you do not need these advance payments, then unenroll/opt out from receiving them.