Today, November 1, the IRS is launching 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 November 1 in order for them to be reflected in their November payment, scheduled for November 15. If a family is unable to make the changes on November 1, enter them by November 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.
For some families, determining the right course of action to take will be complicated. Please contact us right away if you have any questions about the Child Tax Credit’s impact on your tax liability, or any other tax matter.
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 November 15 and December 15 payments, but only if a person completes their updated income request before midnight Eastern Time on Monday, November 1. Changes made after that date, but before midnight on November 29, will only impact the December 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 & QC 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 November 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 December 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.
Get ready to file next year
Early in 2022, families will receive Letter 6419 documenting any advance payments issued to them during 2021 and the number of qualifying children used to calculate the advance payments. This letter can help them accurately reconcile the advance CTC payments they have received and claim any remaining portion of the CTC when completing their 2021 federal income tax return next year.
The income change feature joins a growing set of services available through CTC UP. Available only on IRS.gov, the portal already allows families to verify their eligibility for the payments and then, if they choose to:
- Switch from receiving a paper check to direct deposit;
- Change the account where their payment is direct deposited;
- Update their address or
- Stop monthly payments for the rest of 2021.
Latest information available on IRS.gov
The IRS has created a special Advance Child Tax Credit 2021 page designed to provide the most up-to-date information about the credit and the advance payments. It’s at IRS.gov/childtaxcredit2021.
The agency encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up. People can check their eligibility by using the advance Child Tax Credit Eligibility Assistant.
The webpage features a set of frequently asked questions and a user guide for the Child Tax Credit Update Portal. It also provides direct links to the portal, as well as two other online tools – the Non-filer Sign up Tool and the Child Tax Credit Eligibility Assistant – and other useful resources.