Families who have significant income changes to report for the advance Child Tax Credit payments are running out of time to pass those changes on to the Internal Revenue Service.
The IRS says the changes must be entered on the Child Tax Credit Update Portal (CTC UP) by November 29 to be in effect for the December payment. A Spanish version of the CTC UP is expected to launch in late November.
When income is updated, the IRS can adjust the remaining advance payment amounts so the eligible taxpayers get the correct total amount for the year. The agency reminds married couples that if one spouse updates income on the portal, the update will apply to both spouses and so could affect future advance payments of the CTC for them both.
Time is short for tweaks
There’s no need to report minor fluctuations in income through the portal. Instead, the IRS says, taxpayers should use the online update portal to report substantial changes in annual income.
With the December payment being the last advance installment to be paid in 2021, it’s also the last chance for families to report income changes and have them put into effect for the year.
Updates have to be received on the portal before midnight on November 29 to be included in the December 15 advance payment.
Some families receiving the advance monthly payments are getting amounts below the maximum and may be eligible for an increase. This could happen if, for example, the taxpayer had a job loss during the year or had some other decline in income. Reporting the loss of income through the portal could increase the taxpayer’s advance Child Tax Credit payments for the remainder of 2021.
Updating income through the CTC UP is also important for those CTC recipients who find themselves making more income. Those who now get the maximum monthly payments – but expect to qualify for less at tax time – should update their income amounts now to avoid surprises when they file their income tax return.
Topic C of the IRS’ Frequently Asked Questions has more on calculating the Child Tax Credit. QC4 and QC5 have details for families that qualify to receive less than the full amount.
The IRS has tips for using the CTC Update Portal
The IRS says its Child Tax Credit Update Portal is only available to any taxpayer who is already eligible for the tax credit and is receiving advance payments of the CTC. But there are other limitations to keep in mind:
- The update portal is the only place to report a change in income circumstance to the IRS by advance payment recipients. IRS telephone operators can’t take these changes from callers and representatives at Taxpayer Assistance Centers cannot take them in person.
- Joint filers should note that taxpayers who submitted a joint return in 2020 can only update their income on the portal if they intend to submit a joint return for 2021 with the same spouse.
- Portal users should not be caught off-guard if the portal doesn’t show details of their changes. The IRS says the CTC UP will acknowledge a change was made – but will not display the change itself. Calling the IRS won’t be much help; their telephone representatives won’t be able to confirm a change was made, either.
There’s still time to sign up for the CTC
Low-income families still have time to sign up for the remaining advance payment of the Child Tax Credit.
Any family that isn’t normally required to file a tax return and isn’t already receiving advance payments of the CTC need to check out the IRS website. IRS.gov has tools to help determine a taxpayer’s eligibility for the credit and to help them fill out a simplified tax return to sign up.
Taxpayers have until November 15 to sign up.
Eligible families can get half of the credit amount as advance payments; the other half comes as a refund when the taxpayer files a tax return in 2022.
Need more information?
A special Advance Child Tax Credit 2021 page providing the most recent information about the tax credit and advance payments is available at IRS.gov/childtaxcredit2021. The site provides a number of online tools, including a list of frequently asked questions and a user guide for the Child Tax Credit Update Portal (Publication 5549).
In addition, the site contains direct links to the portal and other tools and resources.
Source: IR-2021-211