On Monday the IRS started issuing advance child tax credit payments under the American Rescue Plan, signed into law by President Joe Biden in March.
This year the credit goes up to $3,000 from $2,000 per child 17 and under to age 6. The credit provides $600 for each child under 6 years old. Eligible families can receive advance payments of up to $300 per month for each child under 6 and up to $250 per month for each child over 6 but under 17. The credit is available even to families with no earned income or that don’t owe any income tax, and covers children who turn 17 this year.
The advance payments will continue through Dec. 15, according to the IRS.
However, some families may choose to opt out of payments this summer and instead receive the full credit in a lump-sum payment when they file their taxes next year, according to IRS spokeswoman Irma Trevino, who said the agency is launching an online opt-out portal this month. It may be a good option for families that tend to owe money to the IRS and the self-employed, she said.
Some families may have plans for how to spend that money next year and therefore would prefer not to receive advance payments this summer, Trevino said.
“Every family has a different situation,” she said. “Other families they may be making estimated tax payments because they’re self employed. Then they would rather have the lump sum when they file their tax returns next year.”
It’s each family’s decision as to which option serves them best, Trevino said, adding that either way the child tax credit will “tremendously benefit the taxpayers in the Rio Grande Valley,” including families who are self-employed.
The IRS tool taxpayers can use to opt out of advance payments will be available by the end of June, she said. An online portal for non-filers to apply for the child tax credit was launched Monday. It can also be used to register for the third economic impact payment (up to $1,400 per eligible individual) and claim rebate credits if they did not receive one or more of the first two stimulus checks.