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Child tax credit: How to use new IRS tools and what to expect before payments come next month

This week, the IRS opened a new online tool for low-income families so they can start collecting their first child tax credit check July 15.

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More online resources and tools will be made available by the IRS for the child tax credit rollout this summer. 

Sarah Tew/CNET

With important tax relief coming to families this summer, some newly available resources are helping to ensure that eligible families know about the temporary expansion of the child tax credit. Earlier this week, the IRS launched an online portal allowing parents who aren't normally required to file an income tax return to receive the advance payments of up to $300 per child next month (or an estimated yearly total of up to $3,600). 

Though it has a few limitations, the new nonfilers portal is the first of several tools that will let parents update the IRS with information on marital status, income changes and number of kids. The White House has also made next Monday, June 21, Child Tax Credit Awareness Day (PDF) to encourage outreach and education about the expanded program to families across the US. Another sign of progress with the rollout is the recent IRS letter sent to 36 million families that may qualify for a payment

Before digging into the various toolkits at hand, you might want to try our child tax credit calculator to see how much money your household qualifies for. We can also suggest some ways to use your child tax credit checks, give you details on how you might receive your payment and tell you how to claim thousands of dollars back for child care expenses. We update this story frequently with new information. 

What are the portals, resources and online tools for this year's child tax credit?

Here's how the online tools will help parents with eligible dependents, according to the IRS:

  • nonfilers portal -- now open -- lets you provide the IRS with basic information about yourself and your dependents if you normally aren't required to file a tax return.
  • One coming online tool will help you determine whether you qualify for the advance child tax credit payments.
  • A second online tool -- which the IRS is calling the Child Tax Credit Update Portal -- will be available before July 1 and will let you opt out of the advance monthly payments to instead receive one payment for the total amount of the credit in 2022. The IRS said this portal will allow you to check on the status of your payments and update the IRS with your current information.

In addition to initiating a June 21 Child Tax Credit Awareness Day with an online toolkit, the White House has launched a new website for the child tax credit. The website provides a useful FAQ for families, details about eligibility and more downloadable information.  

The IRS has also provided a compilation of free tax days in 12 select cities, including Los Angeles and New York. The free tax days will provide eligible families with outreach to prepare and file tax returns in order to receive the advance child tax credit payments.   

How do I use the new 'Non-filer Sign-up' Tool?

Available now, the child tax credit "Non-filer Sign-up Tool" is a way for those who aren't required to file a tax return to give the tax agency basic information on their dependents. This tool can be used by low-income families that earn too little to have filed a 2020 tax return but that need to notify the IRS of qualifying children born before 2021.

With the nonfiler tool, you'll be able to file electronically a simple tax form with the IRS with enough information for the agency to determine your family's eligibility for the advance child tax credit payments. You shouldn't use this tool if you are required to file a tax return but just haven't yet. Also, don't use this tool if you actually filed a 2020 tax return or if you claimed all your dependents on a 2019 return.  

To use the tool, families must have a primary residence in the US for more than half the year. To register, parents should have their personal details on hand, including an email address, Social Security numbers for dependents and a bank account routing number. 

Heads-up: The IRS recommends using the portal on a laptop or desktop computer, not on a phone. While the tool is not mobile-friendly, according to The Washington Post, you can access it from a browser on your smartphone. In addition to requiring an email address, you need to know your filing status and other tax-related information, which as a nonfiler, you may not have readily available. The tool is also not available in Spanish. (We've contacted the IRS about the tool being available in languages other than English.)

The IRS has guidance on how to fill out the form as a nonfiler.  Note that it can take up to 48 hours for the IRS to confirm your email address -- and another 48 hours after submitting your information for the IRS to accept it.

1. To get started, create an account if you don't yet have one. You'll need an email address to confirm your information.

2. On the next page -- named "Fill Out Your Tax Forms" -- enter your information, including your filing status and details about dependents. Because this portal is an update to the tool nonfilers used to claim stimulus checks, you can add information about those payments, called "Recovery Rebate Credit" on the form. Add your banking information to receive your payments electronically instead of in the mail. Tap the Continue to Step 2 button when ready.

3. On this page -- named "E-File Your Tax Forms" -- you'll provide your adjusted gross income, or AGI, and sign the form electronically. (Here's more on how to do that.) When done, tap the Continue to E-File button to submit your information.

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There is no limit on the number of children that parents can receive the credit for as long as both they and their dependents qualify.

Sarah Tew/CNET

Do the portals let parents unenroll from the advance payment program? 

The soon-to-be-unveiled Child Tax Credit Update Portal will let you opt out of receiving the monthly child tax credit payments. That means that instead of receiving monthly payments of, say, $300 for your 4-year-old, you can wait until filing 2021 taxes in 2022 to receive the $3,600 lump sum. 

You may want to opt out because you're expecting your circumstances to change or if the advance monthly payments will interfere in tax planning. Families that usually owe money to the IRS when they file their taxes may want to instead use the full credit next year. Or you might choose a larger payout if your household is saving for a big expense next year. 

What information should I let the IRS know about in the next month? 

Through the portals this summer, taxpayer families will be able to indicate changes to any life circumstances since they last filed their taxes, such as a change in income or child custody status. For example, if you started making less money this year, you'll want to update the IRS about those changes so you can get the correct child tax credit amount.

If you had or will have a new baby this year, it's important to let the IRS know, so you can receive your payment for up to $3,600 for that child. The same applies if you adopted a child or if you gained a new child dependent since you last filed your taxes. 

Also, if you've gained full custody of your child, you'll be the parent who receives the money for your kid. Note that parents who have shared custody will not each get a payment. This is important for domestic violence survivors, according to comments during an IRS oversight hearing by Nina Olson, executive director of the Center for Taxpayer Rights. The "change of circumstances portal should allow them to enter their change in marital status and also where the children are," Olson said.

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What details about the online tools haven't been released yet? 

There are several details that are still unclear about the IRS' child tax credit resources, including:

  • The exact date the Child Tax Credit eligibility assistant and the Child Tax Credit Update portal will be available to families.
  • How the portals will work for families updating their personal details or updating their bank information, and how accessible they will be from a mobile device. 
  • The process for opting out of the monthly payments through the Child Tax Credit Update portal.
  • When the Child Tax Credit Update portal will be available in Spanish. 

What about families without a permanent address?

The IRS is urging people to share information about the child tax credit with others who don't have permanent addresses. By doing this, you're helping make sure families receive the payments they're eligible for. You can share information about the online portals and resources with them so they know about the programs to help them file a tax return.

For more child tax credit 2021 details, here's how much money you can expect. Also, here's what it takes for you and your dependents to qualify for the payments.