Child Tax Credit: You Can Finally Update Your Income on the IRS Website (But You’d Better Hurry)
Families receiving child tax credit payments have until tonight to inform the IRS of any “significant income changes” for those changes to be reflected in the payment coming later this month.
Today, the IRS released a new income-adjustment feature within the Child Tax Credit Update Portal (CTC UP), which allows families to keep the agency abreast of any major swings to their income since 2020.
“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,” according to an IRS announcement.
The agency unveiled the tool this morning, less than 24 hours ahead of the midnight deadline on Eastern time. This leaves families with little time to report big dips or spikes to their income if they want the Nov. 15 child tax credit payment to be as accurate as possible — and avoid potential headaches come tax season.
Not every fluctuation of income necessarily merits use of the tool, as minor changes in family income are unlikely to affect the amount of the monthly child tax credit payments, the IRS says.
Tonight’s deadline is only for adjustments to the Nov. 15 payment. Those who miss this deadline may still use the IRS’s tool to recalculate December’s payment.
As of now, the Dec. 15 payment is the last monthly payment scheduled 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 taxes next year.
President Biden’s Build Back Better spending initiative aims to extend the child tax credit advance payments for one year, but those plans have yet to pass the Senate. To be safe, families should bank on payments for Nov. 15 and Dec. 15 only.
Why use the new income-adjustment feature?
Families whose incomes have changed drastically, for better or 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 dip in income may be eligible for higher monthly payments. The only way for the IRS to know that right now is to use the CTC UP tool.
The opposite is also true: Families whose incomes have increased recently should also let the IRS know. While this may lower their remaining monthly payments, it’s a better strategy in the long run. If the IRS has been overpaying a family, it could negatively affect that family come Tax Day 2022, either in the form of a smaller refund or a bigger bill.
If a family’s income has recently dipped, they won’t be penalized for not updating the IRS with this tool, and they'll still receive the correct amount they're owed when they file their taxes in 2022. But many families who have lost income need money right now (not next year when they file), so it's in their best interest to keep their info up-to-date too.
A new Spanish-language version of the update portal will be released later this month, the IRS says.
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