Advance Child Tax Credit: Should You Opt Out?

It may be a good idea if you usually owe the IRS money or think you will owe at the end of the year.

The new advance child tax credit payments start July 15, 2021. Half of the total credit amount will be issued in advance monthly payments, and the remaining half will be paid as a credit with your 2021 tax return.   However, you can choose to opt out of the advance payments.

There are two scenarios when it might make sense to opt out.

  1. If you usually owe taxes or are very close to owing when you file your taxes, you should consider opting out because the credit amount you are accustomed to receiving will be less.
  2. If you take turns “claiming” your kids.  If you claimed your kids in 2020 but will not be claiming them in 2021, you need to opt out because you will have to repay any advance payments you received!

The following link sends you to the IRS website to Unenroll from Advance Payments: IRS Child Tax Credit Update Portal