After the first advance monthly child tax credit payment was issued this summer, a report published by the Center on Budget and Policy Priorities warned that some 4 million children in low-income households might miss out on the enhanced benefit this year. Why? Because the IRS is basing eligibility for this year's prepayments on 2020 tax returns. If families didn't make enough to file a return, or just haven't gotten around to it yet, the IRS wouldn't know they were qualified to get the payments, which could be up to $3,600 annually per child.
In previous years, low-income families or parents without earnings received only a portion of the credit, if any at all. But the rules for the 2021 credit changed to allow more families to qualify, even if they have no income. The IRS has made it easy for non-tax-filing families to register online for free by filing a simplified return. What's more, when you use the "Non-filer Sign-up Tool," the IRS will automatically issue a payment for both the child tax credit and the third stimulus check, assuming you're eligible.
It's not too late for low-income families to sign up for the credit. With three monthly payments already issued -- and three more to go this year -- the last day to use the IRS tool is Oct. 15. And if parents register online before Oct. 4, they might even be able to get their first payment in October. For more, here's what to know about upcoming deadlines and how to use the IRS Update Portal to manage payments and update your personal info.
How to sign up for the 2021 child tax credit
The IRS launched its online tool back in June to help families that don't normally file income tax returns to enroll in this year's child tax credit program. The tool isn't for families who already filed -- or plan to file -- their 2019 or 2020 income tax return. The IRS will use those tax returns to determine eligibility and disburse the coming payments to qualifying families. The Center on Budget and Policy Priorities predicts that it will take families 15 to 30 minutes to sign up.
The free "Non-filer Sign-up Tool" is designed to allow the poorest families and those experiencing homelessness to register with their name, address and Social Security numbers. Individuals will be able to notify the IRS about any of their qualifying dependents and can provide their bank information for direct deposit of the payments once they start.
The IRS has guidance on how to fill out the form. The first step is to create an account with an email address. The next few steps require entering your information, including an address or bank account to receive payments. You'll also need to provide your adjusted gross income, or AGI, and sign the form electronically. Here's what to do:
1. To get started, create an account if you don't yet have one. You'll need a phone number, a password and an email address to confirm your information. 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.
2. On the next page -- "Fill Out Your Tax Forms" -- enter your information, including your filing status and details about dependents. Those fields are required, but you can skip the optional fields if they do not apply to you. For example, you can also add information about your "Recovery Rebate Credit" on the form, or your banking information to receive your payments electronically instead of in the mail. Tap Continue to Step 2 when ready.
3. On this page -- "E-File Your Tax Forms" -- you'll provide your adjusted gross income, or AGI, and sign the form electronically by creating a new pin. If you did not file taxes last year, enter "0" in the box for AGI and skip the part about last year's self-selected signature PIN. When you're done, tap the Continue to E-File button to submit your information.
The tool has come under fire by some advocacy groups for not being easy to use. The IRS recommends using the portal on a laptop or desktop computer, not on a phone. (The platform on mobile devices is not as easy to read.) Users will also need an email address, a solid internet connection, their filing status and other tax-related information, which isn't typically available for nonfilers. For now, it's only accessible in English, though the instructions are available in multiple languages.
Don't use the IRS nonfiler tool if you filed a tax return
The IRS says you shouldn't use the nonfiler online tool if you already filed a 2020 income tax return or if your adjusted gross income, or AGI, exceeded $12,400 ($24,800 for a married couple). It also says you can't use the tool if your main home is outside the US, if you or your spouse can be claimed as dependents or if you are requesting an advance child tax credit for a child born in 2021. (However, you can use the tool if you need to claim a recovery rebate credit.)
How to stop the rest of this year's monthly payments
Families may unenroll from the child tax credit to defer the advance monthly checks and instead receive the remainder of the credit during tax time next year. The sooner you unenroll through the Update Portal, the better because it can take up to seven days for your request to process. Sometime this fall, you'll be able to re-enroll if you change your mind.
Here are the remaining deadlines for unenrolling from the advance monthly payment program.
Child tax credit unenrollment deadlines
|Unenrollment date||Payment date|
|Oct. 4||Oct. 15|
|Nov. 1||Nov. 15|
|Nov. 29||Dec. 15|
What to know about child tax credit payments and 2022 taxes
The child tax credit payments are advances on next year's tax refund for eligible parents. You'll get half of the money over the course of seven payments in 2021 and 2022. If for whatever reason you receive more money than you're eligible for, you'll need to pay the IRS the difference based on your tax return when you file in 2022. However, there is a repayment protection program to help low-income families that may not be able to repay the extra money.
Other reasons to use the IRS child tax credit tools
We expect changes to the IRS website throughout the fall. You can now view your child tax credit payment history and update your direct deposit and mailing address in the Update Portal. Later on, you'll be able to change other household details like number of dependents and income.
For more information about child tax credit, here's what to do if you're missing a payment.