You might know that with the American Rescue Plan Act of 2021, parents can get monthly checks over the second half of this year as an advance payment on their 2021 child tax credit.

Starting with payments on July 15, 2021, the IRS will pay parents of qualifying children half the total Child Tax Credit amount in advance monthly payments.  Parents will claim the other half when they file their 2021 income tax return. For more on the advance child tax credit, click here.

But what if you’re divorced?  Only one parent can claim the credit for each child and it’s typically the parent with whom the child primarily resides.

Where there is an equal custodial arrangement, however, the parents can agree that the parent with the greater income will claim the child tax credit or they can agree to alternate each year.  To complicate matters, the IRS will send the advance child tax payments to the parent who claimed the child as a dependent in 2020.

But there’s a solution.  The parent who is not designated in the divorce agreement to receive the child tax credit this year can opt out using the IRS’s online portal.

For example, if you claimed the child in 2020 but your ex will claim the child in 2021, you will still get the advance payments.  So you might want to opt out of payments now.  Then, later this year, you can use the portal to update your child tax credit information.

Always double check your options, however, by consulting with your tax professional.

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