Prepayment of the Child Tax Credit
If you do not have dependent children, please disregard this email. If you have dependent children, then please read this email very carefully.

What is the Child Tax Credit?
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The American Rescue Plan Act expanded the Child Tax Credit (CTC) for 2021. In prior years, the CTC was $2,000 per qualifying child under the age of 17. In 2021, eligible taxpayers will receive up to $3,000 per qualifying child between the ages of 6 and 17, with up to $250 per child received in monthly prepayments. Taxpayers with children under the age of 6 will be eligible for a $3,600 credit per qualifying child with up to $300 per child received in monthly prepayments.

Who qualifies to receive the advance payments?

  • Taxpayers who filed a 2019 or 2020 tax return and claimed the child tax credit
  • Taxpayers with a qualifying child under the age of 18 at the end of 2021 
  • Taxpayers who meet the first two criteria and the following income requirements:
  • Single filers with income less than $75,000 (income between $75,000-$107,000 may receive a reduced amount)
  • Married filing jointly filers with income less than $150,000 (income between $150,000-$182,000 may receive a reduced amount)
  • Head of household filers with income less than $112,500 (income between $112,500-$144,500 may receive a reduced amount)


*Please note that if you have a qualifying child, but your income exceeds the income thresholds above, it is our understanding that you will not receive advanced payments. 
IRS CTC Portal
You can use the IRS's CTC Update Portal to opt-out of advance payments and update your information, such as filing status and number of children. If you do not have an existing IRS account, you must create an ID.me account to verify your identity before you can gain access to the portal. This process can be time-consuming, and you will need access to a camera or webcam to create the account. 

Do both parents have to opt-out using the portal?

Yes--if you are married filing jointly, both the taxpayer and spouse need to create an ID.me account and opt-out. If only one taxpayer opts out, then you will receive half of the joint payment. 

Click here for more information on creating an ID.me account.

Important Deadlines
The deadline to opt-out of the first advance payment was June 28th, 2021. Unfortunately, the IRS did not provide sufficient time for taxpayers to update their information before the first payment. Therefore, qualifying taxpayers who did not opt-out before the deadline will receive the first advance payment on July 15th.
Deadlines for opting out of future advance payments:
*It may take up to seven calendar days for the IRS to process unenrollment requests. If you plan to unenroll, you should do so as soon as possible.
Our Recommendation
We are disappointed that the IRS has waited too long to pass along this very critical information. We also understand that opting out of this program will be time consuming and frustrating to many of you, not to mention the complete overreach of the ID.me program. However, despite this, we are still recommending that most taxpayers elect out of the advance monthly payments. If you choose not to elect out, you must track the payments and provide details with your 2021 tax information. It will be imperative that the prepayment amounts that you receive are reported to us when we prepare your 2021 tax return. It's also important to note that this may reduce the refund that you would typically receive or increase the amount that you will pay with your 2021 return.

If you receive more child tax credit money than you are eligible for, you will have to return the overpayment to the IRS when you file your 2021 tax return. We highly recommend that you opt-out to avoid repaying the child tax credit with your 2021 tax return if you've had any of the following changes:
 
  • Change in filing status
  • Income increase
  • A dependent who turned 18 in 2021
  • A child who was a dependent in 2020 who will no longer be a dependent on your 2021 return or can be claimed by another
 
If you still have questions, please contact Lindsey at lindsey@jellisoncpa.com. Please note, we will not be able to provide direct assistance with the ID.me program.
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