IRS rolls out new web tools on expanded child tax credit

The IRS on Tuesday rolled out two new web tools related to the child tax credit expansion established by President Biden’s coronavirus relief law, as the agency prepares to start monthly advance payments of the credit next month.

One of the new web tools, called the child tax credit eligibility assistant, allows taxpayers to check their eligibility for the credit and the monthly payments. The other tool, called the child tax credit update portal, allows families to opt out of the monthly payments and instead receive the credit in a lump sum when they file their 2021 tax returns next year.

The launch of the two new online tools comes after the agency last week rolled out another that allows people who are not required to file tax returns to register for the monthly payments.

“The Update Portal is a key piece among the three new tools now available on IRS.gov to help families understand, register for and monitor these payments,” IRS Commissioner Charles Rettig said in a news release. “We will be working across the nation with partner groups to share information and help eligible people receive the advance payments.”

Biden’s coronavirus relief law, enacted in March, increases the maximum amount of the child tax credit for 2021 from $2,000 to $3,600 for children under age 6 and $3,000 for children ages 6 to 17. It also directed the IRS to make advance payments of the credit. The IRS has announced that it is going to start making monthly payments on July 15.

Administration officials and Democratic lawmakers on Monday held a number of events aimed at increasing awareness of the expanded credit and forthcoming monthly payments. Democrats argue that the expansion of the credit will help to significantly reduce child poverty, and they want to make it a long-term policy.

The IRS will base the monthly payments on people’s 2019 and 2020 tax returns, but the ultimate credit amounts to which taxpayers are entitled depends on their 2021 returns. People who receive advance payment amounts that exceed what they’re entitled to based on their 2021 returns may need to repay the money.

The IRS said that the new update portal will be helpful for taxpayers who may want to opt out of the monthly payments because they no longer qualify for the child tax credit. Taxpayers could be in this situation if their 2021 income is above the income thresholds for the credit, or if another family member is claiming the child as a dependent in 2021.

The IRS said that it is planning to add additional features to the update portal in the coming months, so that households can use it to provide the agency with updated information about their bank account, mailing address, family status and income. The agency also said that it plans to launch a Spanish-language version of the tool in the future.

Taxpayers will have to verify their identities in order to use the tool. People without existing IRS accounts can verify their identities with a photo ID through a partner of the IRS called ID.me., the IRS said.

Some tax professionals have expressed concerns that the requirements for taxpayers to validate their identities will be hard to use. The verification process requires “many factors of authentication,” said Adam Markowitz, a Florida-based enrolled agent.