FFamilies receiving child tax credit payments have until tonight to notify the IRS of any “material changes in income” to have those changes reflected in the upcoming payment later this month.
Today, the IRS released a new income adjustment feature in the Child Tax Credit Update Portal (CTC UP), which allows families to keep the agency informed of any significant changes in their income since 2020.
“IRS urges families to enter any significant income changes by midnight on Nov. 1 so that they count towards their November payment,” according to an IRS announcement.
The agency unveiled the tool this morning, less than 24 hours before the midnight eastern time deadline. This leaves little time for families to report significant drops or spikes in their income if they want the November 15 child tax credit payment to be as accurate as possible – and avoid potential headaches during the season. taxes.
Not all income fluctuations are necessarily worth using the tool, as minor changes in family income are unlikely to affect the amount of the monthly payment. child tax credit payments, says the IRS.
Tonight’s deadline is for November 15th payment adjustments only. Those who miss this deadline can still use the IRS tool to recalculate the December payment.
To date, the December 15 payment is the last scheduled monthly payment for the Child Tax Credit Advance Program, as approved by the American Rescue Plan. The remaining portion of the tax credit will be available to eligible families when they file their income tax return next year.
President Biden’s Build Back Better spending initiative aims to extend child tax credit advance payments by one year, but those plans have yet to be passed by the Senate. To be on the safe side, families should bank on payments for November 15 and December 15 only.
Why use the new income adjustment feature?
Families whose incomes have drastically changed, for better or for worse, should keep their information up-to-date with the IRS so that the remaining child tax credit payments are accurate.
Those who have experienced a significant drop in their income may be eligible for higher monthly payments. The only way the IRS will know at this time is to use the CTC UP tool.
The opposite is also true: Families whose incomes have increased recently should also notify the IRS. While this may lower their remaining monthly payments, it’s a better long-term strategy. If the IRS overpaid a family, it could negatively affect that family on Tax Day 2022, either in the form of a smaller refund or a larger bill.
If a family’s income has fallen recently, they won’t be penalized for not updating the IRS with this tool, and they will still receive the exact amount owed to them when they file their taxes in 2022. But many families who have lost income need the money right now (not next year when they are filing), so it’s in their best interests to keep their information up to date as well.
A new Spanish version of the portal update will be released later this month, according to the IRS.
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