IRS Enhances Key Online Tool for Monthly Child Tax Credit Payments
On June 30, 2021, the IRS added a bank account update feature to its Child Tax Credit Update Portal (which is available only on IRS.gov). This new feature allows eligible families to easily update their bank account information so that they can receive their monthly Child Tax Credit payments in their desired bank account.
The Child Tax Credit Update Portal is a secure, password-protected tool, available to any eligible family with internet access, a smart phone, or a computer. To use the portal, a taxpayer must first verify their identity. An existing IRS username or an ID.me account with a verified identity can be used to sign in. People without an existing account will be asked to verify their identity with a form of photo identification using ID.me, a trusted third party for the IRS.
Families will receive their July 15 payments by direct deposit in the bank account currently on file with the IRS prior to the portal update. Taxpayers not enrolled in direct deposit will receive a check. Any updates made via the portal by August 2 will apply to the August 13 payment and all subsequent monthly payments for 2021. The IRS is encouraging taxpayers to sign up for direct deposit so that they can get their payments sooner.
Families can stop payments at any time. To do so, they can access the Child Tax Credit Update Portal and select the unenroll feature. If a joint return is filed, both spouses will need to unenroll. To stop all payments starting in August and the rest of 2021, they must unenroll by August 2, 2021. Eligible families will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return. For more information on the credit and eligibility, please visit the article we posted in our June newsletter.
There are several reasons that a family may wish to unenroll from the monthly payments. If you are making quarterly estimated tax payments for 2021, these need to be revised if you do not unenroll from the monthly payments. Some families do not expect a tax refund or prefer to receive the refund when they file their 2021 return. Others may realize their income in 2021 will be too high to qualify for the credit or that someone else such as an ex-spouse qualifies to claim their child or children as dependents in 2021. Taxpayers whose main home was outside the United States for more than half of 2021 are not eligible for the credit.
The IRS is alerting taxpayers to be on the lookout for scams related to the Child Tax Credit. Updates should only be done at the IRS.gov website and taxpayers should not click on links received by email, text, or phone.
Please contact us to discuss how the advance payments will impact your 2021 return and estimated tax.