Child tax credit payments: Why some parents should opt out before it's too late - CNET

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Parents can unenroll from the October payment before the Oct. 4 deadline. 

Sarah Tew/CNET

The next check is scheduled to arrive on Sept. 15, but it's too late to opt out. But there's still time if you're thinking about unenrolling from the upcoming child tax credit (The next deadline is Oct. 4). You can opt out each month if your circumstances change during the rolling advance payments. If you choose to unenroll now you'll get the rest of the money during tax time next year. Opting out is also a good way to avoid repaying the IRS next year if you don't qualify for advance payments. 

There are some big changes to this year's credit. First, Some parents are getting up to $300 per kid per month instead of waiting until tax time. But parents must qualify for the advance money. The IRS is basing eligibility on 2020 tax returns, and a lot could have changed since then, so opting out may be the best option if you're ineligible. The advance payments aren't a tax deduction but an actual cash credit, and they won't count as income on your tax return. So you won't be turning down the credit if you opt out, you'll just be delaying when you get it. 

If you decide to unenroll, you'll first need to set up an ID.me account. There are a lot of changes from last year's child tax credit that we'll explain, including how to opt out ahead of October's check. And if you decide to keep the advance payments rolling, here are some ways to spend your child tax credit money. This story was updated recently. 

3 reasons parents should consider opting out

Here are some cases where unenrolling from the 2021 advance child tax credit program could be a good idea: 

• You'd rather have one large payment next year instead of seven smaller payments spanning 2021 and 2022. This could be the case for families saving up for a big expense, those who've budgeted that money to pay off outstanding debt or those who are accustomed to getting a bigger refund at tax time. 
• You know your household's circumstances or tax situation will change (or they've already changed) this year and don't want to deal with having to update your information in the IRS portal. This could be the case for divorced parents who alternate custody of a child. 
• You're concerned the IRS might send you an overpayment based on old tax information from 2020 or 2019, and you don't want to worry about paying any of that money back next year. That could be the case if your household income goes up because you've returned to work or got a new job. It could also be the case if a dependent you claimed previously is aging out of an age bracket before the end of 2021. 

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What happens if parents opt out now?

Those who choose to decline this year's child tax credit installments (amounting to half the total) will still receive the same amount of money in the end, but are simply delaying when they receive it. 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. 

Be aware that if you unenroll from getting the monthly child tax credit payments this year, you won't get your full payment -- or any payment at all -- until after the IRS processes your 2021 tax return in 2022. The total amount will then arrive with your tax refund or can be used to offset any taxes you owe at that time; you'll be in a situation similar to people who have had to claim missing stimulus checks this year.

However, if you chose to receive monthly advances, you'd get six installments of $300 payments each month this year and another $1,800 with your tax refund next year instead. Keep in mind that if you take the money in advance now, it could lower your tax refund next year because you may get more money than what is owed to you. It will also mean you'll have fewer deductions since you've already collected the credit. 

You can use our child tax credit 2021 calculator to estimate how much you should get and see a breakdown of the monthly payments if you choose not to opt out and meet all eligibility requirements. 

Child tax credit payment schedule

Monthly check	Maximum payment per child age 5 and younger	Maximum payment per child age 6 to 17
July 15	$300	$250
Aug. 13	$300	$250
Sept. 15	$300	$250
Oct. 15	$300	$250
Nov. 15	$300	$250
Dec. 15	$300	$250
April 2022: Second half of payment	$1,800	$1,500

How can parents use the online IRS portal to opt out?

It's too late to unenroll from the check that's coming on Sep. 15, but you have until Oct. 4 to opt out of future payments. Fortunately, if your circumstances change this month, you can opt out anytime in 2021 to stop receiving the rest of your remaining monthly advances, even if you've already received the first few payments To unenroll, the IRS said you must opt out three days before the first Thursday of the month in order to not receive the next month's payment. See the chart below for more. 

If you miss a deadline, the IRS said you will get the next scheduled advance payment until the agency can process your request to unenroll. According to the IRS, currently, if you unenroll then you can't reenroll yet. Starting sometime this month, you should be able to opt back in.

Here's how to unenroll:

1. Head to the new Child Tax Credit Update Portal and click the Manage Advance Payments button.

2. On the next page, sign in using your IRS or ID.me account. If you have neither, the page will walk you through setting up an ID.me account. You'll need an email address, a photo ID, your Social Security number and a smartphone or tablet to verify your identity. 

3. On the next page, you can see your eligibility and unenroll from the monthly payments. 

Child tax credit payment unenrollment dates

Payment month	Unenrollment deadline	Payment date
July	June 28	July 15
August	Aug. 2	Aug. 13
September	Aug. 30	Sept. 15
October	Oct. 4	Oct. 15
November	Nov. 1	Nov. 15
December	Nov. 29	Dec. 15

How can families update their income and number of dependents online?

For now, the Child Tax Credit Update Portal is the best way to quickly make any changes that have happened since you last filed your taxes. For example, if you had a new baby in 2021 or gained a qualified dependent or if your income recently changed, the IRS wouldn't have that on file yet. Before the end of 2021, the IRS will give the portal more functionality. Right now, you can use the portal to update your banking information and mailing address. Later this month, you'll be able to add or subtract qualifying children, report a change in your marital status or income or reenroll in monthly payments if you previously unenrolled.  

Do married parents have to opt out separately?

Unenrolling applies only to one individual at a time. So if you're married and file jointly, both you and your spouse will need to opt out separately. If only one of you does so, you will get half the joint payment you were supposed to receive with your spouse, the IRS said.

How can families who don't file taxes get child tax credit payments? 

If you filed your taxes before the May 17 deadline, you should have automatically received the advance monthly payments that started July 15. An online IRS portal for nonfilers is also available for families who don't normally file income tax returns so they can register with the agency and receive payments. However, the tool has been criticized for not being easy to use -- especially on a smartphone. 

For more child tax credit information, here's what to know about the child tax credit payment timeline and how to estimate your total payment using CNET's child tax credit calculator.

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