Do I have to pay back my child tax credit and how do I opt out?
UPWARDS of 36 million Americans will begin receiving expanded child tax credits on July 15, as part of President Joe Biden's $1.9 trillion America Rescue Plan. Eligible families will receive up to $1,800 per child between July and December, however, the credit comes with a catch that may prompt some Americans to opt-out. Read our stimulus checks live blog for the latest updates on Covid-19 relief...  2 Expanded Child Tax Credit payments will be issued as of July 15 Credit: Getty  The enhanced Child Tax Credit (CTC) increases the benefit from a $2,000 annual payment to up to $3,600 per child. Half of that amount is divided into six payments to be paid out in cash, on a monthly basis through December, and the remaining $1,800 is claimed on your 2021 tax return. The Biden administration has touted extending the monthly payments for the next five years. Speaking to CBS This Morning on Monday, White House Press Secretary Jen Psaki said: "[Biden] thinks this is a central benefit that will help families, help get women back to work." Psaki pointed to the more than a million women who have left the workforce since the coronavirus pandemic hit in March last year. The enhanced CTC shares similarities with the three rounds of stimulus payments that have been sent out to millions of Americans over the last 16 months. Enhanced CTC checks, like stimulus payments, are only available to eligible lower- and middle-class families and the IRS will deposit the funds directly into bank accounts. There is, however, a significant difference regarding how the IRS treats overpayment, CBS News reports. The enhanced Child Tax Credit (CTC) increases the benefit from a $2,000 annual payment to up to $3,600 per child  With stimulus payments, eligible Americans didn't have to repay the IRS if they received more funds than were meant to. But that isn't the case for CTC payments, however. "If you are getting money and don't qualify, you need to opt-out of it," Mark Steber, Jackson Hewitt's chief tax information officer told CBS. "You will have to pay that money back." Last week, the IRS also raised the overpayment issue, writing on its website: "If you receive a total amount of advance Child Tax Credit payments that exceed the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment." On July 15, around 36 million American families will begin receiving the enhanced CTC payments, accounting for almost 90 percent of the nation's children. Eligible families will receive $3,600 for each child under the age of six and $3,000 for any children aged between six and 17. Prior to the CTC expansion, the credit excluded children who had turned 17, and the cash was capped at $2,000 per child. Only those who fall below certain income thresholds will qualify. That threshold is $75,000 for single tax filers, $112,500 for heads of households, or $150,000 for married couples filing jointly or for qualified widows and widowers. Earlier this week, the IRS launched a new tool on its website where you can find out whether you qualify for the benefit or not. Families who exceed the designated thresholds will still receive some of the enhanced CTC. They will be issued $50 less for every $1,000 over an income threshold until the enhanced payments are phased out for people who earn $20,000 more than those thresholds. For instance, single filers who earn up to $95,000 and married couples with combined incomes of $170,000 would receive smaller payments, but above that, they would be excluded entirely from the expanded benefits. However, families who earn above the thresholds may still qualify for the regular child tax credit. The regular CTC of $2,000, taken annually on your tax return, is available to single parents who earn up to $200,000. Married couples earning up to $400,000 also qualify. Anyone earning above that threshold doesn't qualify for any child tax credits. Low-income households are no required to file tax returns, meaning some families in need could slip through the cracks when the IRS begins distributing payments next month. To ensure all eligible Americans can access the payments, the IRS launched a tool on its website last week to register for the tax credit. Non-filers will need to have their Social Security numbers handy, as well as their children's. If they have a bank account, they'll also need to have their routing and account numbers to hand to use the portal. With the IRS relying on tax returns to determine payments, sometimes the agency doesn't have the most up-to-date information for you - including how much you earn or the number of children you have. This could result in you either receiving payment when you aren't eligible or receiving less than you're actually entitled to. Others may wish to opt-out to receive a bigger tax credit when they file their taxes next year, while divorced parents with children may wish to opt-out if their former spouse is set to claim their kids on their return. Anyone wishing to opt-out can do so on the IRS' website via a tool called the Child Tax Credit Update Portal. The tool allows people to un-enroll from the tax credit before the first payment is made on July 15. The portal will be updated later this year to allow people to see their payment history and change their bank account information or mailing address.