Updates to the 2021 Child Tax Credit (CTC)

Should you opt in or out of the Monthly Payment Option for your CTC Payment scheduled to begin in July? 

Background

For 2021 and beyond, the Child Tax Credit (CTC) has increased from $2,000 per child to either $3,000 or $3,600 per child depending on if their age. 

IRS has promised that starting in July, you can elect to have that directly deposited into your bank account monthly as opposed to claiming it on your 1040

Are you eligible?   

Kiplinger has set up a very quick and easy site to determine if you are eligible and they also can project the credit and payment amount  <<<Click Here>>>

IRS has set up a website for you to determine if you are eligible <<Click Here>>

Do you want the payment made monthly or do you want to wait until you file your taxes?

If you have children under 17 AND you are used to getting a refund, be aware that your refund may turn into a balance due, so budget accordingly. 

Here is a simple example with 2020 amounts - If you are married, and have 3 children under 17 and usually get a $5,000 refund, remember that the CTC credit in 2020 was $2,000 per child, so without that credit on your tax return, you would have a balance due of $1,000.

Do not be caught off guard.  

It is likely that your federal tax withholdings are based on the CTC.

The Advance CTC is only an advance on your 2021 tax refund, meaning that if you decide to take the monthly payment, your 2021 refund will be lower..  

So, If you could use the money, and can adjust your withholdings so that your refund does not turn into a large balance due, then the Advance Child Tax Credit may be a good option for you.  

If you would rather not then you may want to opt out of the enrollment. 

Helpful Links

There is an option to Opt Out of the Enrollment - <<Click Here>>

IRS has a website for additional information <<Click Here>>

And if you have specific questions - feel free to call or email Doug.

616-970-3000

dougzandstra@gmail.com 

  

Doug Zandstra CPA, CFE, EA

Certified Public Accountant
Certified Fraud Examiner
Enrolled Agent
29 Pearl St NW, Ste 225
Grand Rapids, MI  49503
616 970 3000
dougzandstra.com
email dougzandstra@gmail.com