On July 15, the IRS will start sending monthly child tax credit payments to eligible American parents. If you qualify, the total amount of monthly payments you receive from July to December 2021 will equal 50% of the child tax credit you would otherwise get when you file your 2021 tax return next year. Depending on the age of your children, you could receive as much as $300 per kid each month during the second half of this year (use our 2021 Child Tax Credit Calculator to calculate your expected payment).
But the IRS can only send you monthly payments if it has certain information on hand about you and your children. In most cases, that information will come from your 2019 or 2020 federal income tax return. Unfortunately, though, not everyone is required to file a tax return. So, what happens then? Can you still get monthly child tax credit payments if you haven't filed a recent tax return?
The good news is that the IRS now has a way for parents who aren't required to file an ordinary tax return to submit the information needed to receive monthly child credit payments. Depending on your 2020 adjusted gross income (AGI), you can do this by filing either a "simplified" tax return or a complete return using certain dollar amounts. But whichever method you use, make sure you follow the instructions very carefully (as described below). Otherwise, you might not get the monthly payments you're expecting.
(Note:If you used the IRS's "Non-Filers: Enter Payment Info Here" portal last year to get a first-round stimulus check, then you don't need to take any action at this time to received monthly child credit payments.)
Are You Required to File a Tax Return?
To use either of the alternative filing methods discussed below, you can't be required to file a federal income tax return for the 2020 tax year. That means your 2020 income must be below a certain amount. The exact amount is based on your filing status and age, as shown in the following table.
Federal Tax Return Filing Requirements (2020 Tax Year):
If your income is above the applicable dollar amount, you should have filed your 2020 tax return by May 17 or requested a filing extension until October 15, 2021. If you extended your filing deadline to October 15, filing sooner rather than later may avoid problems getting the right amount of monthly child tax credit payments. If the IRS doesn't have your 2020 return before it starts processing your first monthly check, it will base your payments on your 2019 return. That could result in an incorrect payment amount.
"Simplified" Return Instructions
You can file a "simplified" tax return if you're not required to file a 2020 federal income tax return, you haven't filed a 2020 return, and you're not a resident of a U.S. territory. You can either file a paper or electronic simplified return using Form 1040, Form 1040-SR, or Form 1040-NR.
The IRS will use the information provided on your simplified return to estimate your monthly child tax credit payments. However, you must follow the IRS's instructions carefully (as described below). In addition, you may face civil or criminal penalties if you provide incorrect information. After all, a simplified tax return is still a tax return.
Here's what you need to do if you're filing a simplified return to sign up for monthly child tax credit payments:
1. Write "Rev. Proc. 2021-24" on the Form. If you're filing a paper simplified return by mail, write "Rev. Proc. 2021-24" above the printed material at the top of page 1. That's the IRS guidance document that authorizes simplified returns. The IRS will immediately know that your return is a simplified return.
2. Select a Filing Status. Check the appropriate filing status for the 2020 tax year at the top of the form.
3. Provide Personal Information. Enter your name, mailing address, and Social Security number (or IRS individual taxpayer identification number (ITIN)) on the appropriate lines of your form. Also include your spouse's name and Social Security number (or ITIN) if you're filing a joint return.
If you're a nonresident or resident alien who doesn't have a Social Security number, isn't eligible to receive a Social Security number, and doesn't have an ITIN, then you must attach Form W-7 to your simplified return to apply for an ITIN.
4. Note Dependents on Someone Else's Tax Return. You must check all the applicable boxes on your tax form in the area immediately below the virtual currency line for each person who could be claimed as a dependent by anyone else for the 2020 tax year.
5. List Your Dependents. If you're filing a simplified return, you must provide information on the appropriate lines of the tax form about each dependent you had at the end of 2020. For each dependent, you must provide their name, Social Security number or adoption taxpayer identification number (ATIN), and relationship to you.
Also check the child tax credit box in Column (4) for each dependent who has a Social Security number that is valid for employment and is your "qualifying child" for child tax credit purposes for the 2020 tax year.
6. Leave Certain Lines Blank or Use Specific Amounts. Except as described below, leave Lines 1 through 38 of Form 1040 or Form 1040-SR blank, even if the values for these lines are in fact not zero. Here are the exceptions:
Lines 2b, 9, and 11. Enter $1 on these lines (taxable interest, total income, and AGI).
Line 12. Enter the applicable standard deduction for your filing status on Line 12. If you're filing Form 1040-NR electronically, enter $1 on Lines 7 and 8 of Schedule A (itemized deductions) and on Line 12 of Form 1040-NR.
Line 15. Enter $0 on Line 15 (taxable income).
Lines 30, 32, 33, 34, and 35a. Enter the sum of your 2020 recovery rebate credit on Lines 30, 32, 33, 34, and 35a. Use the Recovery Rebate Credit Worksheet for Line 30 in the 2020 Instructions for Form 1040 and 1040-SR. If any amount is incorrect on Line 30, 32, 33, 34, or 35a, the IRS will correct the amount, but the correction will delay processing of the return and, therefore, enrollment for monthly child tax credit payments. If you're filing Form 1040-NR, leave these lines blank.
Line 35a. Don't check the box on Line 35a (Form 8888 attached) because the monthly child tax credit payments can't be divided among multiple accounts.
Lines 35b through 35d. You can have the IRS deposit your monthly child credit payments directly into your bank account by entering your direct deposit information on Lines 35b through 35d. But don't ask for payments to be deposited into an account that is not in your name (e.g., into your tax return preparer's account).
7. Sign the Return. You must sign your simplified return under penalties of perjury. Also include your identity protection personal identification number (IP PIN), if applicable, with your signature. (You can retrieve a lost IP PIN on the IRS's website.) You can also enter the identifying information of any third-party designee, if applicable, at the bottom of page 2.
Zero AGI Filers
Normally, people with $0 of AGI (Line 11 of your return) can't file a federal return electronically because tax preparation software and return processing parameters don't accept $0 AGI entries. To get around that limitation, the IRS has special rules for non-filers who have zero AGI for the 2020 tax year and want to file an electronic tax return. Since there are no similar processing issues with paper returns, the special rules only apply to e-filed returns.
In addition to having zero AGI and filing an electronic return, the special rules only apply if you're not required to file a 2020 federal income tax return, you haven't filed a 2020 return, and you're not a resident of a U.S. territory. As with simplified returns, the special rules for zero AGI filers also apply to people filing Form 1040, Form 1040-SR, or Form 1040-NR. The IRS will use the information provided to estimate your monthly child tax credit payments.
In addition to all other information required to be entered on the tax form, a zero AGI filer must enter the following:
$1 as taxable interest on Line 2b of the form;
$1 as total income on Line 9 of the form;
$1 as AGI on Line 11 of the form; and
$1 as itemized deductions on Lines 7 and 8 of Schedule A (Form 1040-NR) and Line 12 of Form 1040-NR (Form 1040-NR filers only).
A zero AGI filer must also sign the return under penalties of perjury and include their IP PIN, if applicable. As with simplified returns, you can also enter the identifying information of any third-party designee at the bottom of page 2 of the tax form.
IRS Portal to Report Changes
Once the IRS has the information it needs to send you monthly child tax credit payments, you'll be able makes changes using an online portal that the IRS is required to create. (The IRS expects to launch the portal by July 1.) For instance, once the portal is up and running, you'll be able to go online and update your income, marital status, or the number of children you have. So, if you lose your job, get divorced, or have a new baby, your monthly payments can be adjusted accordingly.
You can also use the portal to opt out of monthly payments. Remember that the payments you receive from July to December are supposed to equal 50% of the total credit you're entitled to for the year. If you prefer to claim the entire credit on your 2021 return, then you can tell the IRS to hold off on the monthly payments.
Rocky Mengle was a Senior Tax Editor for Kiplinger from October 2018 to January 2023 with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, Rocky worked for Wolters Kluwer Tax & Accounting, and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky holds a law degree from the University of Connecticut and a B.A. in History from Salisbury University.
