Under the American Rescue Plan Act (ARPA), P.L. 117-2, the IRS must make 2021 periodic advance child tax credit payments to taxpayers up to the “annual advance amount.” These payments — up to $300 per month per child under age 6 and up to $250 per month per child age 6 through 17 — will be paid in equal amounts and made no earlier than July 1, 2021, and no later than Dec. 31, 2021.
For tax year 2021 only, ARPA increased the child tax credit amount to up to $3,000 for each qualifying child between age 6 and 17 at the end of the 2021 tax year, and $3,600 for each qualifying child under age 6 at the end of the 2021 tax year. ARPA also made the child tax credit for 2021 fully refundable if the taxpayer (or spouse, on a joint return) has a principal place of abode in the United States for more than one-half of the 2021 tax year.
The IRS has opened an online site to enable taxpayers to unenroll from receiving advance payments of the 2021 child tax credit (CTC).
The new “Child Tax Credit Update Portal” allows parents to view their eligibility, view their expected CTC advance payments, and if they wish to do so, unenroll from receiving advance payments (opt out).
You may want to unenroll from receiving advance Child Tax Credit payments for several reasons, including if you expect the amount of tax you owe to be greater than your expected refund when you file your 2021 tax return. The payments you receive are an advance of the Child Tax Credit that you would normally get when you file your 2021 tax return. Because these credits are paid in advance, every dollar you receive will reduce the amount of Child Tax Credit you will claim on your 2021 tax return. This means that by accepting advance child tax credit payments, the amount of your refund may be reduced or the amount of tax you owe may increase. You may avoid owing tax to the IRS if you unenroll and claim the entire credit when you file your 2021 tax return.
There is, of course, a deadline to unenroll. To stop advance payments, you must unenroll 3 days before the first Thursday of next month by 11:59 p.m. Eastern Time. You do not need to unenroll each month.
If you miss a deadline to unenroll, you will get the next scheduled advance payment until we process your request to unenroll. Once unenrolled it may take up to 7 calendar days to process it, and you can NOT re-enroll at this time. Unenrollment is a one-time action, however the IRS is working on an option to re-enroll.
If you file your tax return “Married Filing Jointly” BOTH the taxpayer and the spouse will need to unenroll. Unenrolling applies to the individual only. If you don’t unenroll, you will get half of the joint payment you were supposed to receive with your spouse.