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How to opt out of the 2021 child tax credit

The monthly payments will start on July 15, but some families may rather receive a lump sum in 2022 instead.

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Find out how to receive your $3,600 tax credit in one payout instead of monthly checks.

Sarah Tew/CNET

If your family qualifies for the new child tax credit, the first advance payment will arrive on July 15, with monthly checks continuing through December. The rest of your money will come with next spring's tax refund. But you do have the option to opt out of the monthly checks to instead receive one lump sum -- which could be up to $3,600 depending on your kid's age -- when you file your tax return next year.

There are several benefits to holding off on receiving the payment until next year: For example, if your income or number of dependents will change during 2021 and you don't want the hassle of extra paperwork. To opt out, you'll have to use an IRS child tax credit portal that should be live by July 1.

Keep reading to find out more about why you may want to consider opting out -- and how to do so before July 15. And in the meantime, here's how you can claim up to $16,000 in child care expenses as a tax break next year, and some ideas for the best ways to spend your child tax credit money when it comes. Plus, here's what we know about the new stimulus plans and how they might bring you more money. This story gets frequent updates. 

Why would parents want to opt out of advance child tax credit payments in 2021?

Here are some reasons why unenrolling from 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 spanning 2021 and 2022. This could be the case for families saving up for a big expense or those who have budgeted for that money to pay off outstanding debt. 
  • You know your household circumstances or tax situation will change and don't want to deal with having to update your information in the portal.
  • You're concerned the IRS might send you an overpayment based on changes to your situation this year, and you don't want to worry about paying that money back next year.
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What does the payment schedule look like for those who opt out?

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. 

Be aware that if you unenroll from 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 total amount 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 insted. You can use our child tax credit 2021 calculator to estimate how much you should get.

How will the new IRS portals help set up a single annual payment next year? 

If you filed your taxes before the May 17 deadline, then you'll automatically receive the advance monthly payments starting July 15. But before next month, two IRS portals will be available that are designed specifically for the new child tax credit payments, with one of them available to households who wish to opt out of this year's monthly installments. A portal for nonfilers is already available.

We'll know more about the details once the other portal is up and running. We do know the IRS will have paper forms available for those who don't have internet access. "We will make forms and instructions available for folks who want to opt out," IRS Commissioner Charles Rettig said April 13.

We also know the portals can be used to update the IRS with any changes that have happened since you last filed your taxes. For example, if you had a new baby in 2021, gained a new qualified dependent or if your income changed recently, the IRS wouldn't have that on file yet.

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.