— On Monday, Nov. 1, the Internal Revenue Service will launch a new feature allowing any family receiving monthly Child Tax Credit payments to update their income using the Child Tax Credit Update Portal (CTC UP), found exclusively on IRS.gov.
To help families plan ahead, the IRS also announced today that in late November it will launch a new Spanish-language version of the CTC UP.
The IRS urges families to enter any significant income changes by midnight on Nov. 1 in order for them to be reflected in their November payment, scheduled for Nov. 15. If a family is unable to make the changes on Nov. 1, enter them by Nov. 29 so they are reflected in the December payment. Once the update is made, the IRS will adjust the remaining payment amounts to ensure people receive the total advance payment for the year. For married couples, if one spouse makes the income update, it will apply to both spouses and could impact both spouses’ future monthly advance payments of the Child Tax Credit.
Income feature right for some
The new income feature can help families make sure they are getting the right amount of advance Child Tax Credit payments during 2021. For that reason, it will be especially useful to any family who wants to raise or lower their monthly payments because their 2021 income has risen or fallen substantially, compared to 2020.
In many, but not all, cases a big income swing can either raise or lower a family’s monthly payments. Normally, this means that small changes in income will not impact the payment amount and need not be entered into the CTC UP.
Any change to the monthly payment amount will be reflected in both the Nov. 15 and Dec. 15 payments, but only if a person completes their updated income request before midnight Eastern Time on Monday, Nov. 1. Changes made after that date, but before midnight on Nov. 29, will only impact the Dec. 15 payment, which is the last scheduled monthly payment for 2021. The IRS will adjust the payment amount to reflect these changes and ensure people receive their total advance payment for the year of up to $1,800 for each child under age 6 and up to $1,500 for each child ages 6 through 17.
Who qualifies for a bigger payment
In some cases, families who are currently receiving monthly payments that are below the maximum may qualify to have their payments increased. This could happen if, for example, they experienced job loss during 2021, or for some other reason are receiving substantially less income this year. If the reduction in income is large enough, reporting that change now may increase the amount of their advance CTC payments for the rest of this year.
For any family already receiving the maximum payment, a drop in income will not increase the payment amount. Normally, the maximum CTC payment is $300 per month for each qualifying child, under the age of 6, and $250 per month for each child, ages 6 to 17.
Most families are receiving half of the total CTC through monthly payments. This means that any changes entered into the CTC UP will increase or decrease their monthly payments to ensure they receive half of their total expected credit before the end of 2021. They will claim the remaining portion on their 2021 tax return.
Who should have their payments reduced
Any family whose income rose substantially in 2021 should consider having their payments reduced. This is especially true if they are now receiving the maximum monthly payment, and they expect to qualify for less than the full credit when they file their 2021 federal income tax return. For more information on calculating the CTC, see Topic C of the agency’s Frequently Asked Questions. In particular, where a family qualifies to receive less than the full amount, see QC 4 & 5.
Using the portal to report income changes
Only families who are already eligible for and receiving advance CTC payments based on their 2020 tax return can use the CTC UP to update their income. Note that someone who filed a joint return for 2020 can only update their income if they plan to file a joint return for 2021 with the same spouse. IRS representatives cannot process income changes over the phone or at Taxpayer Assistance Centers.
After an income update is completed, the Update Portal will acknowledge a change was made but will not display the change. Likewise, IRS representatives won’t be able to confirm that an update was made.
Low-income families can still sign up
It’s not too late for low-income families to sign up for advance CTC payments.
The IRS urged any family not already receiving payments who normally isn’t required to file a tax return to explore the tools available through IRS.gov. These tools can help determine eligibility for the advance CTC or help them file a simplified tax return to sign up for these payments as well as Economic Impact Payments and the Recovery Rebate Credit.
The deadline to sign up is Nov. 15, 2021. People can get these benefits, even if they don’t work and even if they receive no income. Families who sign up will normally receive half of their total Child Tax Credit on Dec. 15. This means a payment of up to $1,800 for each child, under 6, and up to $1,500 for each child, ages 6 to 17
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