Child Tax Credit 2021

[renosky]

We forgot to decline the monthly child payments coming this fall.  We have been receiving them.  How will this affect 2021 taxes?  

[xmasbaby0]

If you do not want to receive more monthly payments then go to the IRS Manage Payments portal to opt out of payments for the remainder of the year.    You will have to enter whatever payments you have already received on your 2021 tax return.   If you were not eligible then the credit will be reconciled against your refund or tax due.

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

[renosky]

We do qualify.  I guess what are the pros and cons of taking the payments or declining and getting a bigger refund in the spring?

[KochuK]

Hi renosky, thanks for joining TurboTax Special Forum today.

Please refer to IRS 2021 Child Tax Credit and Advance Child Tax Credit Payments - Topic H.

QH1 answers the situations if you received too much advance child tax credit or not enough.

QH4 - QH7 explains the circumstances that you may not need to pay back the "excess" advance child tax credit.

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

You can still use the Child Tax Credit Update Portal to "opt out."

Child Tax Credit Update Portal

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

Hope the above helps.

[xmasbaby0]

Only you can weigh your own advantages of getting the monthly payments now vs. waiting and getting a bigger refund---we know nothing about your family or your family's immediate/future needs.   That is a just a personal decision for you to make.   The credit is a fixed amount---so if you get the monthly payments now you get the other half as a credit on your tax return.   

https://ttlc.intuit.com/community/family-tax-credits-and-deductions/help/what-are-the-new-child-tax-...

[Akil C]

Hi Renosky!

Thank you for your question.  The payments you have received are an advance of the Child Tax Credit that you would claim on your 2021 tax return.  Because these credits are paid in advance, every dollar you receive will reduce the amount of Child Tax Credit you will claim on your 2021 tax return. This means that by accepting advance child tax credit payments, the amount of your refund may be reduced or the amount of tax you owe may increase. 

You may avoid owing tax to the IRS if you unenroll and claim the entire credit when you file your 2021 tax return.  Here is a link to the IRS Topic J: Unenrolling from Advance Payments, if you would like to. 

Also, if you believe you were not eligible for the Advance Child Tax Credit payments, you may find out how to return the payment using this link to Topic O: Returning a Payment. 

Please let me know if you have any more questions. 

Thanks!

Akil C.