Today is the Last Day to Opt-Out of First Child Tax Credit Payments

The IRS will send the first round of monthly child tax credit payments on July 15. If you don't want to receive the payment, you only have a few hours left to notify the IRS. The deadline for opting out of monthly payments is 11:59 p.m. Eastern Time on June 28 (that's today!) if you don't want to receive the first payment. You can use the IRS's online Child Tax Credit Update Portal to unenroll from the monthly child tax credit payment process (To sign-in, you'll need either an existing IRS username or an ID.me account.)

If you miss the deadline and you're eligible for a monthly payment, you'll get the first payment on July 15 and each of the other scheduled payments until the IRS processes a request from you to unenroll from the monthly payment process. Additional payments will be sent August 13, September 15, October 15, November 15, and December 15.

If you're married and file a joint tax return, your spouse also needs to opt-out since unenrolling only applies on an individual basis. If your spouse doesn't unenroll, you'll still get half of the joint payment you were supposed to receive with your spouse.

If you do opt-out of the monthly payments, you won't be able to re-enroll until late September 2021. So, if you opt-out of the first monthly payment, you'll effectively be opting out of the August 13 and September 15 payments as well.

Changes to the Child Tax Credit for 2021

For 2020, the child tax credit was worth $2,000 per child 16 years old or younger. It also began to disappear as income rose above $400,000 on joint returns and above $200,000 on single and head-of-household returns. For some lower-income taxpayers, the credit was partially "refundable" (up to $1,400 per qualifying child) if they had earned income of at least $2,500. That means the IRS will issue you a refund check for the refundable amount if the credit is worth more than your income tax liability.

The American Rescue Plan, which was enacted in March, provided a dramatic, one-year expansion of the credit for the 2021 tax year. For example, the credit amount jumped from $2,000 to $3,000 for children 17 years of age or younger (up from 16 years of age) and to $3,600 for children 5 years old and younger. The extra amount ($1,000 or $1,600) is reduced – potentially to zero – for families with higher incomes, though. For people filing their tax return as a single person, the extra amount starts to phase-out if their adjusted gross income is above $75,000. The phase-out begins at $112,500 for head-of-household filers and $150,000 for married couples filing a joint return. The credit amount is further reduced under the pre-existing $200,000/$400,000 phase-out rules. The child tax credit was also made fully refundable for the 2021 tax year (which means refund checks triggered by this year's credit can be greater than $1,400), and the $2,500-of-earned-income required was dropped for the year.

However, the most unique change for the 2021 child tax credit is that half of the credit amount will be paid in advance through monthly payments issued between July and December of this year – if you want them. If you don't want the monthly payments, then you need to opt out of the advance payment process. If you don't opt-out and accept all six of the monthly payments, then you'll claim the remaining half of the total credit amount on your 2021 tax return, which you'll file next year. If you opt-out of some but not all the monthly payments, every dollar you receive from July to December will reduce the amount of credit you'll claim on your 2021 return. (Kiplinger's 2021 Child Tax Credit Calculator tells you how much your monthly payments will be and how much you can claim on your 2021 tax return.)

Who Might Want to Opt-Out of the Monthly Child Tax Credit Payments?

Not everyone will want to receive half their child tax credit in monthly payments this year. For example, some people who don't need the money this year will prefer to take the full credit on their 2021 tax return to lower the tax they'll owe with that return or increase the tax refund they'll get next year.

In most cases, the monthly payments will be based on your 2019 or 2020 tax return. But the credit amount will ultimately be based on the information reported on your 2021 return. If your circumstances change in 2021, you could end up being paid too much in monthly payments and then end up having to pay some of that money back. (Parents with 2021 modified adjusted gross income between $40,000 and $80,000 on a single return, $50,000 and $100,000 on a head-of-household return, and $60,000 and $120,000 on a joint return will need to repay a portion of any overpayment, while parents with modified AGIs above those amounts will have to pay back the entire overpayment.)

People who earn more money in 2021 or who can no longer claim a child as a dependent in 2021 (e.g., because of alternating custody under a divorce decree) could fall into this category.

Opting Out of Future Child Tax Credit Payments

If you want to opt-out of future monthly child tax credit payments, the full list of unenrollment deadlines is as follows:

For complete coverage of this year's credit, see Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs.