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$300 child tax credit payment? Why parents are opting out

Thinking of unenrolling from the monthly payments? Here are three reasons why you should.

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Parents will be able to opt out of advance payments monthly ahead of checks being disbursed. 

Sarah Tew/CNET

Some parents are having second thoughts about accepting the advance child tax credit payments for a few reasons. Eligible families can get up to $300 in advance per month for each dependent, and the other half of the total will be sent when you file your taxes next year. So why would you want to unenroll from the extra monthly cash? Maybe you'd rather receive your money as a bigger tax refund in 2022. Or you may be concerned about getting more money than you're eligible for and the possibility of repaying it. You also may be worried about what it means for your taxes if you got a promotion or other changes that could disqualify you from monthly payments. 

The child tax credit payment is different from past years. First, the IRS bases your advance payments on tax information from 2019 or 2020. Second, these child tax credit payments aren't a tax deduction, but an actual cash credit. They won't count as income during tax season. Third, if you unenroll from the 2021 prepayments -- which could be up to $300 per kid each month through the end of the year -- you're not turning down the credit but just putting off when you'll get the money. For some families, the total can amount to $3,600 per child -- a big deal for those covering school expenses and other financial hurdles amid the pandemic.

It's too late to opt out of getting the next check that's coming on Aug. 13, but you can unenroll by Monday, Aug. 30 for the September check and future advance payments. You can manage your payments using the online IRS tool, but you'll need an ID.me account first. If you decide to keep the advance payments coming, here are some ways to spend your child tax credit money. This story has been recently updated. 

Why are eligible parents 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 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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How can parents unenroll from advance child tax credit payments?

If you want to unenroll, you have until 9 p.m. PT on Aug. 30. You can opt out anytime in 2021 to stop receiving the rest of your remaining monthly advances, even if you've already received payment. 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 in late summer, 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

Do both parents need to opt out if they're married?

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. 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.

Will parents get the child tax credit money during tax time if they 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 

Can parents who don't file taxes get advance 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. 

How the IRS Update Portal can help with child tax credit questions

The Child Tax Credit Update Portal will also let you add 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. By early August, you'll be able to update your mailing address. Later in the summer, 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. 

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