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Child tax credit: IRS to tell 36 million families they're eligible for up to $3,600 per kid

The IRS is now sending letters to 36 million families, telling them they may qualify for the child tax credit checks starting July 15. Here's how to find out how much you could get.

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The enhanced payments will put more money in the bank of qualified households. 

Sarah Tew/CNET

If you think you may qualify for the expanded child tax credit payments next month, watch your mailbox. The IRS is now sending letters to 36 million families who may be eligible for the payments of up to $300 a month per kid. For those families that qualify, the IRS will automatically send the first advance payment, with monthly checks for half the total amount continuing through the rest of 2021. However, as is usually the case with anything tax-related, the child tax credit rules can get complicated. We can help. 

To get the payments, your family needs to bring in less than a certain amount of income, and your dependents have to meet certain age requirements. The newly increased 2021 payments are for up to $300 a month per child, or $3,600 total per kid over the course of this year and next. That includes babies born in 2021. Another key thing to know: The advance monthly payments are optional, so parents can choose instead to receive the entire lump sum when they file their taxes in 2022.

According to a White House fact sheet, the American Families Plan might extend the new child tax credit in the future. We'll keep you informed. Here's what's happening with a potential fourth stimulus check, what to do if you haven't received your third stimulus checkwhen it could come and how to track it. This story was updated. 

IRS now notifying families they may qualify for the payments starting in July

The IRS is now sending letters to 36 millions families notifying them they may be eligible to receive monthly child tax credit payments, based on their 2019 or 2020 federal income tax return, or if they used the the Non-Filers tool to claim a stimulus check.

The IRS said it will then send a second check to those who qualify with an estimate of their monthly payment. If you've not filed a 2019 or 2020 return, the IRS said to do so as soon as possible so it has your most recent information for determining your payments.

Families will get up to $3,600 for each child under age 6

If your dependents are below the age of 6, you can claim up to $3,600 per child as long as you meet the income requirements, which are listed below. That's $1,600 more than the $2,000 that parents were able to claim on their 2020 tax returns. 

This includes newborns, even if they're born later in 2021. Before next month, parents will be able to update the IRS with their new dependent information in an online portal in order to begin receiving the advance payments this year. Otherwise, parents can file a claim on their 2021 tax return next year.

2021 Child Tax Credit Age Brackets

Ages 5 and younger Up to $3,600 each child, with half of credit as $300 monthly payments
Ages 6 to 17 Up to $3,000 each child, with half credit as $250 monthly payments
Age 18 $500 one-time check in 2022
Ages 19 to 24, full-time college students $500 one-time check in 2022

Families will get up to $3,000 for each child between ages 6 and 17

If your dependents are age 6 or older, you'll qualify for up to $3,000 per kid over the next year, assuming again that you meet the income requirements. This includes your dependents who are 17 years old. In prior years, parents could only claim up to $2,000 for each dependent age 16 and younger.

You can also get money for your older kids, although it's not nearly as much. You can claim up to $500 for an 18-year-old, as well as for full-time college students ages 19 to 24. 

Individuals who make $75,000 or less (or couples who make $150,000 or less) will get the full amount

As long as your adjusted gross income, or AGI, is $75,000 or less, single taxpayer parents will qualify for the full child tax credit amount. After $75,000, the amount begins phasing out. At $240,000, single filers phase out of the tax credit entirely.

If you're married and filing jointly with your spouse, your AGI needs to be $150,000 or less to qualify for the full child tax credit amount. At $440,000, couples will phase out of the tax credit entirely.

The credit phases out by $50 for every $1,000 of income over the threshold amounts for all filers, according to Joanna Powell, managing director at CBIZ. 

2021 Child Tax Credit Income Limits

Who qualifies What the law says
Single filer An AGI of $75,000 or less to qualify for the full amount
Head of household An AGI of $112,500 or less to qualify for the full amount
Couple filing jointly An AGI of $150,000 or less to qualify for the full amount
Nonfiler Will need to file a 2020 tax return to get the payment

Heads of household who make $112,500 or less are qualified for the total amount

As a head of household, your AGI will need to be $112,500 or less to qualify for the full child tax credit amount. The amount you could get begins phasing out if your income is over that amount, and by $240,000 you phase out of the tax credit.

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Parents who don't typically file their taxes may qualify, but...

Even if you don't usually file taxes -- you're considered a nonfiler -- you'll need to file a return to qualify for the 2021 child tax credit. Payments will be automatic for those who filed their 2020 tax returns by May 17, so if you didn't have your tax return submitted by this time, the IRS won't know to send you a payment.

By July 1, the IRS will open two separate online portals. One of the portals will be crucial for households that don't traditionally file income taxes so they can register their information. Households that have gained new dependents since filing taxes should update their information in the portal to make sure they get the amount they're due. 

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Some eligible families may opt to receive the full $3,600 per kid in one single installment next year. 

Sarah Tew/CNET

More eligibility rules for the new child tax credit checks

  • The child you're claiming must live with you for at least six months out of the year.
  • You and your child must be US citizens, unlike mixed-status households. 
  • For married couples filing jointly, at least one spouse needs to have a Social Security number or an ITIN. 
  • The child must also have a Social Security number -- a child with only an ATIN won't qualify. (This includes adopted children.)
  • Parents who share custody of a child cannot both receive the tax credit.

Here's what else to know about the 2021 child tax credit.

Important: The results here are based on our current knowledge of the law, but should be treated as broad estimates only. Consult a financial planner for a more personalized estimate.