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How to Opt-out of the Advance Child Tax Credit

by Meagan Weber, CPA, MBT

For tax year 2021 only, the IRS has modified the Child Tax Credit and will disburse an early payout of the credit equal to 50% of the amount a qualifying family would normally receive when they file their 2021 tax return. Disbursements began July 15, 2021, and will continue through the end of the year on a monthly basis.

The total amount of advance payments for qualifying families is $1,800 per child under age 6, or $1,500 for children age 6-17.

Household modified adjusted gross income (MAGI) limits to receive the full credit:

Tax filing status

Phaseout thresholds*

Single

$75,000

Head of household

$112,500

Married filing jointly

$150,000

*Over these thresholds, you may still qualify for a partial advance credit of $1,000 for children under age 18.

However, since credit prepayments get trued up on 2021 tax returns, if you are expecting to make significantly more during tax year 2021 than in previous years, you may want to opt-out of receiving the creditโ€”the advanced payments you received may exceed the actual child tax credit you qualify for on your 2021 tax return. In that case, you may need to repay what you received in 2021.

The IRS will direct deposit the advance payments if you registered for direct deposit on your most recently processed tax return. If you did not elect direct deposit on your tax return, the IRS will mail a check. If you would like to update your account to receive the advance payments via direct deposit or change the account associated with the direct deposit you can access the Child Tax Credit Update Portal at https://www.irs.gov/credits-deductions/child-tax-credit-update-portal. You can also use this portal to elect out of receiving the advanced payments.

Deadlines in the case that you want to opt-out of receiving the credit:

Month of payment Deadline to unenroll Date of payment

July

June 28 (expired)

July 15

August

August 2

August 13

September

August 30

September 15

October

October 4

October 15

November

November 1

November 15

December

November 29

December 15

If you have questions regarding this or other tax planning considerations, you should reach out to your trusted tax planning advisor for assistance.

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Meagan Weber, CPA, MBT

Meagan Weber, CPA, MBT

Meagan Weber is a director and leads the personal tax service area. She specializes in high net worth individual tax compliance and planning, gift and trust compliance and planning, and wealth transfer planning. Meagan has provided public accounting services since 2008 and has been at Redpath and Company since 2014.

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