A refresher on the child credit payments
The expanded child tax credit was one of the COVID relief measures included in the $1.9 trillion economic stimulus bill President Joe Biden signed in March.
It's worth up to $3,000 for each child ages 6 through 17, and $3,600 for kids under 6. Households are receiving half the credit through monthly payments — of as much as $250 or $300 — throughout the second half of this year. The rest can be taken in the form of tax refunds next year.
The cash can be spent however families like, whether to pay for essentials like food and diapers, cover routine bills, or deal with debt.
Families who missed out on their July and August payments can still catch up starting in September — but they must log on to the IRS child tax credit update portal to register by 11:59 p.m. Eastern time on Aug. 30.
Instead of having half the credit spread out over six installments, it will be divided between four. Families will receive four $375 payments for each child ages 6 through 17, and payments of $450 for kids under 6.
Households that miss the Aug. 30 deadline will have until Oct. 4 to sign up to start receiving money in October.
Time is running out for non-filers to register
To collect the payments, households must file their taxes — which is something low-income households may not be accustomed to doing.
For those families, the IRS has provided a non-filer tool that will be available on the tax agency's website until Oct. 15.
Households also must meet the income limits for the child tax credit. Couples qualify if they earn $150,000 or less; the income limit for single parents is $75,000.
Families that qualify and whose tax returns were processed by Aug. 2 were included in mid-August round of payments, says the IRS.
Which means any households whose returns were processed after Aug. 2 should expect to see their first payment on or after Sept. 15.
Households that don't file taxes have until mid-October to sign up for the expanded child tax credit payments using the non-filer tool. Otherwise, they'll have to claim the total credit through a tax return next year.
Some families may want to opt out of payments
Parents can unenroll from the advanced credits at any time — even if they’ve already received payments.
Some families may choose to opt out of the advance payments in favor of receiving a lump sum next spring. To stop payments for September through the rest of the year, taxpayers must go into the portal and update their preferences.
With married couples, both spouses will have to unenroll. If just one spouse opts out, the household will still receive monthly payments — but for half the normal amount.
Unenrolling is a wise choice for any parent who likely won’t qualify for the child credit come tax season next year, maybe because of a rise in income or because someone else will claim the child as a dependent.
Families who want to opt out, starting in September, must meet the Aug. 30 deadline. After that, they have until Oct. 4 to make any changes to their preferences for the rest of the year, starting with the October payment.
What to do if you need a payment ASAP
If your family isn't getting the monthly payments, either because you've opted out or you earn too much to qualify for them, here are a few options to pull together your own family stimulus check.
Deal with your debt. Credit cards are convenient, but they can leave you with a pile of expensive interest. Tackle that load by folding your balances into a single debt consolidation loan. You’ll have only one payment to budget around, and the lower interest rate will slash the cost of your debt, to help you pay it off faster.
Trade in your mortgage for a cheaper model. If you own your home and haven't refinanced in the past year, you're overdue. A recent Zillow survey found that nearly half the homeowners who've taken advantage of the pandemic's rock-bottom mortgage rates are saving $300 a month or more. Thirty-year mortgage rates are under 3% again, so gather several mortgage refi offers to see how much you might save.
Cut your insurance costs. You might easily be paying hundreds of dollars too much for car insurance every year if you haven't looked around for a better rate lately. A little comparison shopping could help you find a much cheaper policy. And you can use the same strategy when the time comes to renew or buy homeowners insurance.
Turn your pennies into a portfolio. Even if you don't have much money, you can still earn returns from today’s red-hot stock market. A popular app can help you invest just your "spare change" from everyday purchases into a diversified portfolio.