In cases of shared child custody, parents usually have a number of questions and concerns. It may be unclear which parent should be the one receiving payments every month, or it might be necessary to consider options like opting out of advance payments. No matter what the situation is, there is information out there to help you through these challenging circumstances.
A tax credit is in place for parents who are unwed, separated or divorced and want to share child custody. For 2021, the IRS has changed its rules for the child tax credit, leaving many parents unsure of whether or not theirs is in jeopardy. The changes include qualifying households and the system of payment distribution. Guidelines of all these changes were issued by the IRS to families that they may apply to, so you’ve likely already received notification if you are part of the child tax credit program.
The IRS made changes as of 2021
With the recent changes to this tax incentive intended to lighten the load for parents who are struggling the most, it’s all the more important to verify that you’re still entitled to it. Accepting advance credit payments that you are no longer entitled to receive under these new rules may lead to a tricky financial situation.
Since the IRS looks at your most recent tax return to determine how many dependents you claimed, it’s encouraged by the agency to unenroll from receiving the advanced monthly installments if there have been any changes in child custody since then. This can be done via their Child Tax Credit Update Portal.
The child tax credit is a valuable asset to parents in situations in which shared custody of a dependent is necessary. To ensure that your household qualifies and that you’re receiving the advance payments you’re entitled to, it’s important to keep up with the updated rules.