Families should be aware of several important changes to the 2021 child tax credit. The total amount of child tax credits has increased from a $2,000 maximum to $3,000 for children aged 6 to 17. For children under six years old, families qualify for a tax credit up to $3,600 for 2021.
The first half of the 2021 child tax credit is available via monthly payments beginning Jul. 15. However, you may unenroll from monthly payments before that date if you wish to receive the entire tax credit when you file next year.
Reasons to opt out of monthly tax credits
In some situations, you should unenroll from monthly child tax credit payments:
- If you'll owe the IRS and want to save the full tax credit to offset a tax bill.
- If you expect to live outside of the U.S. for more than half of 2021.
- If you qualified for child tax credits in 2019 or 2020 but your 2021 income makes you ineligible. You can opt out to avoid having to pay back the credit in this case.
- If parents are separated and alternate the years of claiming children on their taxes, the parent who claimed the child(ren) in 2019 or 2020 but will not claim them in 2021 should opt out. This will ensure the correct parent or guardian benefits from this year’s tax credit.
How to unenroll from monthly child tax credit payments
If you wish to defer the monthly payments to receive your full child tax credit when you file your 2021 taxes, simply unenroll via the Child Tax Credit Update Portal. Choose “Unenroll From Advance Payments” and then sign in with your IRS username or ID.me account and follow the prompts to unenroll.
You must opt out by Jun. 28 for the Jul. 15 payment. Once unenrolled, you cannot opt back in until Sep. 2021. Cnet.com also notes that you must opt out at least three days before the first Thursday of the month you’re opting out of.
Opting out of monthly child tax credit payments is simplest via the online portal. However, those without internet access can call the IRS using the number included in letters sent to eligible families.
How to know if you’re eligible for the 2021 child tax credit
To qualify for the 2021 enhanced child tax credit, you need to have a child aged 17 or younger and meet income requirements. The IRS has just launched two online portals to assist families in determining their eligibility:
- The Child Tax Credit Update Portal: This helps you find out if you’re eligible for enhanced tax credits, and how much you're eligible for. You can also opt out of monthly payments here.
- The Advance Child Tax Credit Eligibility Assistant: This portal is open to help clarify whether you qualify for advance child tax credit payments.
Non-filers can use the "Submit Your Information" tool to provide information so that the IRS can send them advance child tax credit payments.