It is too late to opt out of your first Child Advance Tax Credit (CTC) payment. Taxpayers who still wish to unsubscribe must do so at least three days before the first Thursday of the following month. For example, to de-enroll for the August 13 payment, a taxpayer must complete the de-enrollment process by August 2. The full calendar of deadlines to cancel registration is provided in Topic J of the IRS Advanced CTC FAQ. Taxpayers should be aware that unenrollment can take up to seven days to process and the IRS recommends rechecking to make sure it was properly canceled. For joint taxpayers, both spouses must choose not to receive advance payments to choose to exclude themselves entirely. Otherwise, the spouse who did not exclude themselves will receive half of the calculated payment.
Taxpayers can now also use the Payment Management Portal to update bank account information for payments starting in August. July payments will use bank information already on file with the IRS. Banking information updated through the Payment Management Portal will take effect the following month. In other words, to make sure your payments go to the correct bank account, update your bank information as soon as possible. It is not clear what will happen to misdirected direct deposits.
So, you have decided to opt out or you need to update some information. You will first need to authenticate with the IRS. If you already have an IRS Secure Access account, you must use it for authentication. Otherwise, you will need to use the IRS’s third-party service, ID.me. Kathy Morgan, registered agent and owner of Puzzled By Taxes, LLC in Haughton, Louisiana, cautions that the process of setting up an IRS secure access account or using ID.me for authentication involves several steps that, while not complex, are not either. They are simple. Here are some tips:
- Be prepared for a high-tech process and the glitches that go with it.
- Be prepared for the Knowledge Based Authentication (KBA) questions. You may need to answer questions about your mortgage or credit card bills, so keep that information handy.
- Have a cell phone plan in your name. If you have a family plan and your name is not what is on the plan, you may not be able to create your account.
- Have your photo ID ready. Either a driver’s license or a US passport. The ID.me system will use your phone’s camera or webcam to match your face to the photo ID face.
Kathy notes that “any taxpayer who does not have access to all this technology has no choice [to opt out or update information] as there is currently no number to call to opt out by phone. If the taxpayer doesn’t have a US driver’s license or a US passport, they are also out of luck. “
Kathy also predicts that “most taxpayers will speak their minds and will do so at tax time next year” and “if they are not claiming the children or setting their withholding to a minimum hoping that the credits will cover the tax. tax or generate a refund, they will be in for a big surprise. ” She and other tax professionals are concerned that many taxpayers will not understand the difference between CTC advance payments and EIPs and will be surprised, frustrated, and likely unprepared if they have to repay excess credit amounts. . Most tax professionals predict another difficult filing season.
Here are a few more tips for advance payment recipients that can make next year’s tax season a little smoother for you, your tax professional (if you have one), and the IRS:
- If you must file a 2020 tax return and have not yet done so, do not use the non-taxpayer portal to receive your CTC payments in advance. Doing so may get you your payments, but it may also result in you having to file an amended return for 2020. The non-reporting portal files a simplified version of Form 1040 and that will be considered your original return if you have a filing requirement. . And remember, even if the IRS opens electronic filing for 2020 amended returns, amended returns are still processed manually and manual processing will delay your refund.
- Save your year-end reconciliation letter! The IRS will not issue a version of Form 1099 (or any other form) to taxpayers. Instead, they will issue Letter 6419 which will indicate the amount of CTC advance payments paid in 2021. For 2020 returns, many taxpayers did not keep their EIP letters (Letter 1444) and once EIP 3 began issuing, the search tool for EIPs 1 and 2 went offline. Manually reviewing Recovery Refund Credits for taxpayers who did not save or did not receive their Series 1444 letters is one of the reasons many 2020 tax returns have yet to be processed and taxpayer refunds they are lingering. Tax professionals hope that, in the 2022 tax filing season, a lookup tool for CTC advance payments will be available to both taxpayers and tax professionals with the proper clearances on file to ensure that the payments are correctly reconciled on taxpayers’ 2021 tax returns. .
- Keep checking IRS frequently asked questions. The IRS updates frequently asked questions information. Unfortunately, frequent updates mean revisiting the site for updates and re-reading the questions to make sure the information you read a week ago hasn’t changed recently. It is tedious, but the information is complete and reasonably well organized into topics.
The expansion of the child tax credit will lift millions of American children out of poverty and help 39 million households. The advance payments of the credit will allow to obtain money to the families that need it at this moment. If you and / or your tax professional have decided that opting out is a better option for your family, it is best to do so as soon as possible and be prepared for the entire process, from identity verification to verification that your cancellation registration was successful and / or your updates were processed.
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