Child tax credit payments can now be adjusted for changes in income (but there is a deadline)

0

You can now adjust your monthly child tax credit payments if your income has increased or decreased this year. However, you’ll have to act quickly if you want to change the amount of your next installment, which is due on November 15th. The deadline for notifying the IRS of a change in income is midnight November 1 (it’s Monday!) if you want your next payment to be higher or lower. Income changes reported before this date will also be reflected in your December 15 payment, which will be the last monthly payment in 2021.

If you can’t meet the November 1 deadline, notify the IRS of the income adjustment by November 29 to have it reflected in your December child tax credit payment. If you are married, an income update made by one of the spouses will apply to both spouses, which could affect future monthly payments for both of you.

Why your income is important

The amount of each monthly child tax credit payment is typically based on information taken from your 2020 federal income tax return, and one of the key information is your income for the past year. If your income for 2021 is significantly higher or lower than your income for 2020, it may mean that you are receiving too much or too little each month from the IRS.

For example, suppose your income for 2020 is slightly above the applicable child tax credit phase-out threshold for 2021. This means – based on your 2020 tax return – the IRS is likely to reduce your income. monthly child tax credit payments. However, if you were unemployed for part of 2021 and your income is lower this year, your 2021 child tax credit may not be affected by the phase-out rules. In this case, telling the IRS that your 2021 income is lower could result in a higher monthly payment in November and December. (Note that, if you are already receiving the maximum payout amount, a drop in income will not result in a larger payout.)

On the flip side, if your income is significantly higher in 2021 than it was in 2020, you might want your monthly child tax credit payments to be reduced (or even eliminated by excluding yourself. ) – especially if you receive the maximum monthly payment. but expect to qualify for less than the full credit for 2021. If the total amount of your monthly payments exceeds the 2021 child tax credit to which you are entitled, you may need to repay the excess amount when you file your 2021 return. In this case, reporting the highest income amount now will allow the IRS to adjust your final payments accordingly.

How to report a change in income

To report a change in income, go to the Child Tax Credit Update Portal on the IRS website (you will need an existing IRS account or ID.me account to access the portal). You can only use the portal to update your income if you are already eligible and receive monthly child tax credit payments based on your 2020 income tax return. If you have filed a joint income tax return for the 2020 tax year, you can only update your income if you plan to file a joint tax return for 2021 with the same spouse. Once you have completed the income update, the portal will recognize that a change has been made. However, the change will not be displayed.

Also note that IRS representatives cannot process income changes over the phone or at taxpayer assistance centers. They will also not be able to confirm that a revenue update has been performed. So stay on the portal and don’t waste your time trying to call the IRS to make a change or verify that a change has been made.

For full 2021 Child Tax Credit coverage, including monthly payments, see 2021 Child Tax Credit: How Much Will I Get? When will the monthly payments arrive? And other FAQs.


Source link

Leave A Reply

Your email address will not be published.