Want to opt out of the monthly child tax credit payments? You can - CNET

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Receiving the child tax credit payments in advance this year could be a lifeline for many parents.

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If you and your family qualify for the 2021 enhanced child tax credit, the first monthly payment is slated to arrive July 15, either by direct deposit or by mail. Depending on where your eligible dependents fall in the age bracket, you could get up to $300 per month for each kid. But there could be a reason why you'd rather wait to get a check in 2022 for the full amount (up to $3,600 per kid). 

To opt out of the monthly payments in favor of receiving one larger payment next year instead, you'll need to access one of the two IRS portals that will open by July 1. Those portals will also allow you to make changes or updates to your life circumstances. Plus, we have some suggestions for how to spend your child tax credit money when it arrives.

There's additional money for your household, too -- for instance, you can claim up to $16,000 in child care expenses as a tax refund next year. If you're still waiting on your $1,400 stimulus check or your "plus-up" payment, here's how to track it down. And here's what we know about the new stimulus plans and how they might bring you more money.

Why you might not want the advance monthly payments

Here are some reasons why opting out of the monthly child tax credit payments may be a good idea: 

• You'd rather have one large payment next year instead of seven smaller payments over 2021 and 2022.
• You know your circumstances or tax situation will change and don't want to deal with updating your information in the portal the IRS plans to open by July 1.
• You're concerned the IRS might accidentally send you an overpayment, and you don't want to worry about paying that money back.

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What happens if you opt out of the partial monthly payments

Be aware that if you opt out of getting the monthly child tax credits from July through December, you won't get your full payment -- or any payment at all -- until after the IRS processes your 2021 tax return next year. The full payment will then arrive with your tax refund, or could be used to offset any taxes you owe at that time; you'll be in a similar situation to those people who had to claim missing stimulus checks on their taxes this year.

So if you have a child who's 5 years old or younger by the end of 2021 and your income meets the requirements, you'll get $3,600 total when you file your taxes in 2022. However, if you choose to receive monthly payments, you'd get six installments of $300 payments each month this year and another $1,800 with your tax refund next year. You can use our child tax credit 2021 calculator to estimate how much you should get.

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How to opt out of monthly payments through the upcoming IRS portal

By July 1, the IRS will open two portals designed specifically for the new child tax credit payments. One of them will be used to opt out of receiving multiple payments this year. We've asked the IRS about how exactly you'll be able to do this. We do know the IRS will have paper forms available for those who don't have internet access. "We will make forms and instructions for the forms available for folks who want to opt out," IRS Commissioner Charles Rettig said April 13.

We're not sure how the portals will look or what the process will be, but we do know they can be used to update your record with any changes that have happened since you last filed your taxes. For example, if you had a new baby in 2021 or have gained a new qualified dependent -- the IRS wouldn't have this information on file yet. Or maybe your income has changed recently. 

If you don't update your information in the portal and you filed your taxes before the May 17 deadline, you'll automatically receive the monthly payments. We'll know more about the details once the IRS portals are up and running -- the IRS should have more resources to build the portals now that tax season is coming to an end.

For more child tax credit information, here's what you need to know if you share custody of a child. Also, here's what to know about the child tax credit payment timeline and the extra thing parents of 2021 babies will need to do to claim their payments.

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Want to opt out of the monthly child tax credit payments? You can - CNET
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