The new child tax credit automatically enrolls taxpayers to advanced payments. Unenrolling from the child tax credit in 2024 is still possible though. If you’re planning on unenrolling from the advanced child tax credit payments, we highly suggest hurrying up as the payments will be sent starting from August 1st.
Opting out of advanced child tax credit payments is especially a wise move for taxpayers that are expecting a reduced amount in the credit. The child tax credit amount has been increased by a good amount, and taxpayers that have a qualifying child are now receiving advanced payments of the credit. The advanced payments are sent to every taxpayer in the full amount of the credit. Taxpayers will receive half of the credit amount starting from August 1st. But, if the credit amount that the taxpayer can claim is less than the total amount received through advanced payments, the taxpayer will have to pay it back to the Internal Revenue Service.
Why opt out of advanced child tax credit?
Take a look at how much you’ll receive from the advanced child tax credit payment and decide whether it’s a good idea to get them in advance. Taxpayers that receive less than the full amount have a higher chance of owing to the IRS rather than getting the amount not received in their refunds.
There are also those that want a boost in their refunds rather than getting five separate payments for half of the credit. The child tax credit is now fully refundable, meaning that you’ll get the full amount to reduce your tax liability or add up to your tax refund. In either case scenario, it’s always better to get an extra $1,500 on your tax refund rather than getting five separate payments for that is better. The same also applies to reducing tax liability as it can help you avoid underpayment penalties if you didn’t pay enough tax during the tax year through estimated tax payments and tax withholdings.
Unenroll from the advanced CTC payments
The Internal Revenue Service introduced an online tool that enables taxpayers to unenroll from the CTC advanced payments. A similar tool is also used by taxpayers that aren’t required to file a federal income tax return to enroll in the payments. The tool for that is separate. Enroll for the advanced child tax credit payments as a non-filer.
To unenroll from the advanced child tax credit payments, you’ll need to use your IRS account to verify your identity.
How much is the advanced child tax payments?
The advanced child tax payments are paid monthly from August 1st to the end of the year. Since you’ll receive half of the tax credit, the amount received depends largely on the child’s age. For children under the age of 6, the child tax credit is $3,600, thus, the payment is $1,800 for those five months which equals $360. For children between the ages of 6 and 18, the payment is $3,000, making the monthly payment $300 monthly.