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The IRS issued the first round of monthly payments to taxpayers for the Child Tax Credit last week on July 15. American families who are eligible for the credit based on their most recently filed tax return received the payments via direct deposit or paper check. Monthly payouts will continue throughout the rest of the year with families receiving any remaining portion of the credit they qualify for when they file their 2021 tax return.
In case you aren’t quite up to speed, the monthly Child Tax Credit payments are calculated based on your 2019 or 2020 tax return – whichever you filed last. Therefore, if you haven’t filed your 2020 tax return yet, your payment is based on your 2019 tax situation. That means it may not be the right amount if your tax situation changed between tax year 2019 and 2020.
Want accurate payments? File your 2020 return now.
In order for the IRS to have the right information to accurately calculate your monthly payment, you need to file your 2020 tax return as soon as possible. Otherwise, you risk receiving a payment that’s lower than what you’re owed (get your money!) – or worse, you receive a payment higher than what you’re owed and have to pay some of it back when you file your 2021 return. Yep, that’s right – if you receive more credit dollars than what you qualify for this year, there’s a chance you’ll have to pay some of it back. And we assume it’s safe to say that’s a situation no one wants to find themselves in.
To avoid both scenarios, the IRS urges all filers to submit their 2020 tax returns as quickly as possible, so they have the most up-to-date information to base your payment on. The next monthly payment is scheduled for August 13. Your return must be filed and processed by the IRS before that date to receive an updated payment amount.
Get more specifics on the payment value, including income limits, here: Child Tax Credit: Monthly Payments Begin July 15 for Eligible Families.
Want to opt out of the payments? Use the Child Tax Credit Update Portal.
If you prefer to not receive monthly payments (there are a couple reasons why you may not want to), the IRS created a tool called the Child Tax Credit Update Portal to help you manage the payments. You can also use the tool to check the status of your payments or update your bank account information if you have already filed your 2020 return. Future versions of this tool will allow you to also update the IRS with any new information related to your tax situation that may impact your payment amount, like the birth or adoption of a qualifying child.
Check out the IRS’ Advance Child Tax Credit 2021 resource page for more information.