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3 reasons to opt out of monthly child tax credit payments by Oct. 4

Your family can still unenroll from the three remaining advance payments in 2021. And it might be a better idea than you think.

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Unenrolling from advance payments now can help reduce a financial headache next tax season. 

Sarah Tew/CNET

While receiving your child tax credit money upfront can be beneficial -- you can use the payments to help pay bills, buy groceries and other household expenses -- many families have decided to opt out. While half of the monthly checks have already been disbursed, you still have the option to unenroll from the October, November and December payments. Don't worry, opting out doesn't mean you'll never get the money -- instead, you'll be postponing the remaining portion until you get your tax refund in 2022.

Right now, there's no easy way to inform the IRS of substantial household changes that would impact this year's child tax credit eligibility or payment amounts. Opting out is one solution to the problem, especially for divorced or single parents with joint custody, or for those who want to avoid owing the IRS money for an overpayment. Opting out can also help families who would simply prefer a bigger tax refund in 2022. We'll explain below. 

Before you make a decision, remember that the child tax credit isn't a tax deduction but an actual cash credit, and the money you receive won't count as income on your 2021 tax return. The key to managing your checks, updating your information and opting out is the IRS Update Portal, which requires an ID.me account. If you decide to use the advance payments to cover expenses now, here are some ways to spend your child tax credit money. This story was updated recently. 

3 reasons to opt out of the remaining few payments

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

  • You'd rather have one larger payment next year instead of the multiple 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, especially since the option to make those changes in the IRS Update Portal isn't yet available to parents. This could be the case for separated, divorced or unwed parents who alternate custody of a child. 
  • You're concerned the IRS might send you an overpayment based on old tax information, and you don't want to worry about paying any of that money back. That could be the case if your household income went up because you 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. 

How to opt out using the online Update Portal 

Fortunately, if your circumstances change, 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. You have until the Oct. 4 deadline to opt out of the remaining October, November and December payments. See the chart below for more. 

If you miss the deadline, you will get the next scheduled advance payment until the agency can process your request to unenroll. According to the IRS, if you opt out, you can't currently reenroll. 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. 

Remaining child tax credit unenrollment dates

Payment month Unenrollment deadline Payment date
October Oct. 4 Oct. 15
November Nov. 1 Nov. 15
December Nov. 29 Dec. 15
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What happens if you decide to opt out before Oct. 4

Those who choose to decline this year's child tax credit installments will still receive the same amount of money but are simply delaying when they receive the rest of 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 still get the full $3,600 in the end, with the bulk of the money coming after you file taxes in 2022. 

That means that if you unenroll before Oct. 4 from the remaining monthly child tax credit payments, you won't see another payment until after the IRS processes your 2021 tax return. The amount of your credit will be adjusted and will arrive as part of 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've had to claim missing stimulus checks this year.

If you choose to continue receiving monthly advances, you'll get a total of six installments this year (amounting to half the total of the credit you're owed) and another larger payment (amounting to the other half of the total) with your tax refund next year. Keep in mind that accepting the advance payments now could lower your tax refund in the spring because you've already collected some of 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. 

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 to update your number of dependents, income and status

The Child Tax Credit Update Portal is the best way to quickly make any changes that have happened since you last filed your taxes. Right now, you can use the portal to update your banking information and mailing address. Later this month, you should 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.

Though we don't know the exact date, the IRS will soon give the portal more functionality. 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 and would need to be informed in order to adjust your child tax credit payments. 

Each parent needs to unenroll 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.

Families that don't file taxes can also register for the money

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.