Today is the deadline for parents to opt out of receiving the first monthly child tax credit payment. Parents who wish to have the entire 2021 enhanced child tax credit applied at the end of tax season will need to unenroll using the IRS's new web portal by the end of the day.
Legislation from the American Rescue Plan made it so that half of this year's child tax credit will be applied in advance as monthly payments in every eligible household. It also changed the tax credit from a maximum of $2,000 per child to $3,600 for children under 6 and $3,000 for all other children under 18. That means many parents will be receiving up to $300 per child each month for the second half of 2021.
But parents who typically owe money at tax season or don't know exactly how much money they will end up making in 2021 may want to opt out of the monthly payments in order to avoid owing money come tax season. Applying the credit as a lump sum can also help to reduce your overall tax burden and potentially earn you a larger tax refund once you've filed.
Last week, the IRS released the web portal for unenrolling from the advanced child tax credit, along with instructions stating that parents will need to unenroll from the advanced monthly payments three days before the first Thursday of every month. That means if you want to avoid having the money from the first payment deposit into your bank account on July 15, you need to do so by 11:59 p.m. ET today, June 28. Parents will not need to continuously unenroll from every monthly payment, but if you don't unenroll in time for the July 15 payment, you will still be able to unenroll ahead of future payments.
One important detail to note is that if you file your taxes as married filing jointly, both you and your spouse must unenroll using the portal with your individual ID.me account or IRS username. If only one of you unenroll, your family will still receive half of the joint payment you were supposed to receive, which cannot be sent back.
It's important to be certain that you absolutely want to wait until tax season to have the credit applied: Once you opt out, you cannot opt back in until late September 2021, according to the tax agency's FAQ about unenrolling. But even if you do opt back in, you will not receive the payments you opted out of until they are applied to your federal tax return.
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