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Child tax credit: 2021 babies are eligible, but there's an extra step to claim your $3,600

The IRS doesn't know about your baby born in 2021, but there's a way to claim your $3,600 payment anyway.

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If your baby has a 2021 birthday, there's one extra step to claiming your child tax credit payments.

Sarah Tew/CNET

The expanded child tax credit for 2021 is different from prior years in two major ways: First, the amount has been increased, maxing out at $3,600 for each eligible child under age 6 (and $3,000 for older children). New parents can rest easy -- at least when it comes to the child tax credit -- because babies born or adopted in 2021 who meet all other requirements will indeed qualify for the full $3,600 payment.

And second, payments will come in monthly installments, beginning July 15, instead of being included in your tax return (unless you opt out). Qualifying families will receive up to $300 per month per child between July and December, totaling $1,800, with the other half of the check arriving with next year's tax refunds. But since the IRS doesn't typically "know" about new dependents until the following tax season -- that's April 2022 -- a lot of parents are wondering if they'll see any monthly checks or if they'll have to recoup what they're owed when they file next spring.

The IRS is opening two web portals by July 1 specifically for the child tax credit. Families who need to make any changes to their status, including the addition of new dependents since last year, can use these portals to ensure they begin receiving their credit in monthly installments. Read on to learn more about how the portals could work, and how to use them to claim the credit for babies born or adopted in 2021, or any new dependents who weren't listed on your 2020 return. Plus, here's how to claim an additional $8,000 to $16,000 credit for child care expenses and what we know about a fourth stimulus check.

How much is the expanded child tax credit worth for new parents?

The child tax credit in 2021 has changed since last year, most notably the increased payment amount. The new credit for 2021 newborns will be capped at $3,600 per eligible child, going down from there as your income goes up. The IRS uses different AGI phaseout limits (when your income is too high to qualify for the full amount of the credit) for single filers, heads of household and married couples filing jointly. CNET built a calculator for determining your specific payment eligibility, which you should definitely try out, especially if you also have older children (kids 6 and up qualify for less), share custody or don't hold U.S. citizenship.

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When will my child tax credit payments actually arrive?

Unlike stimulus checks, the expanded child tax credit will be paid out in two distinct phases. Half your child tax credit total will arrive in monthly checks, which will be sent out beginning July 15 and continuing through December on the 15th of every month (unless the 15th falls on a weekend or a holiday, in which case checks will likely go out the following Monday). The other half will be paid out on your 2021 tax return when you file in 2022. Anyone who qualifies and filed a 2020 return by this year's May 17 tax deadline will begin receiving monthly checks automatically -- no need to file, claim, request or otherwise hunt down your money, as long as the IRS knows how many dependents you have.

OK, but how can parents of 2021 babies claim the child tax credit?

If your dependents haven't been reported to the IRS by July (or haven't even been born yet), you have two options for receiving your payment. First, you could always wait until you file your return next spring and receive the entire child tax credit in one lump sum, just like how the former version of the credit worked. But if you'd like to receive monthly payments before next year's tax season rolls around, there's another option. 

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The first chunk of child tax credit payments will arrive monthly, beginning in July and continuing through December.

Sarah Tew/CNET

The IRS has promised to set up two online portals by July 1. The first portal will allow taxpayers to report any change in status (dependents, income) throughout the year. The second portal is for those who don't normally file taxes. These families can use the portal to make sure their information is correct, including adding any 2021 babies as qualified dependents. 

We don't have a lot of information yet about how the portals will work or whether they will be made available before July 1 (the IRS' resources are still being allocated to processing tax returns), but when they are unveiled, new parents will be able to use them to claim dependents in time to receive the child tax credit checks they are owed. Even if you go this route, you may end up receiving more than half your payment next tax season, depending on timing.

What else could affect child tax credit payments and eligibility?

One important caveat is that both you and your child must be US citizens and your child needs a Social Security number. And another: Your child's age group is based on their age on Dec. 31, 2021, so anyone aging into the next payment bracket at any point in 2021 will be considered a part of that group for the entirety of the year. (Got a 5-year-old turning 6 this year? Unfortunately, you may be out about $600.)

We'll keep this story updated as new information emerges about the expanded child tax credit. Still have unanswered questions? Here's every important detail to know about the child tax credit, 2021 income limits, how shared custody could impact your child tax credit payments, and a timeline for monthly payments. And here's everything we know so far about a potential fourth stimulus check and nine weird facts about stimulus checks that you should know about.