On Monday, the IRS began sending out letters to more than 36 million families, providing them with more information about the newly expanded (and fully refundable) 2021 Child Tax Credit. The letters will include dates of when taxpayers will see advanced payments.
Following this initial letter, families should watch for a second email from the IRS which will give information about the amount of their estimated monthly advance payments. The IRS also plans to open an online portal for where families can check their eligibility, update information about income and qualifying children, check the status of their payments and opt out of the the advance payments program
The total credit amount will increase for many taxpayers. Families eligible will receive a credit of up to $3,000 per qualifying child between the ages of 6 and 17 and up $3,600 per qualifying child under the age of 6. Each child's age is determined at the end of 2021 and will include children who turn 17 in 2021. Over 90% of families with children will receive an average benefit of $4,380 under the expanded credit.
The increased tax credits are reduced based on income.
Eligible families who have a primary residence in the US for more than half the year will receive advance payments from July through December. The amount of advance payments will be up to 50% and will be either based on actual 2020 tax returns or an estimation based on 2019 tax returns. Families should file their 2020 returns as soon as possible to make sure they are eligible for the tax credit based on 2020 income.
For more information, visit IRS - Advance Child Tax Credit Payments in 2021. The IRS will update that page as more information becomes available.