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Child tax credit: Who counts, how much and what else to know before July 15

Will your family get up to $300 per month for each kid this year? We'll explain payment schedule, amounts, eligibility and more.

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The child tax credit will begin paying families in advance next month and through the end of this year. 

Sarah Tew/CNET

Roughly 90% of US households with kids are receiving more information about the 2021 enhanced child tax credit. Millions of eligible families will get IRS notices with details on payment timelines and amounts of monthly checks, which will start automatically next month. (Households that didn't receive the IRS letter might still be eligible to receive the payments, but some action will be required.) 

You can check to see if your dependents qualify and use our child tax credit calculator to estimate your total amount through next year. Here's a quick recap: On July 15, families with qualifying children could get $300 monthly for each dependent under age 6 (or $250 monthly for older dependents). Half the total credit will arrive via these advance installments between July and the end of 2021, and the rest will be part of tax refunds after filing next spring. 

Parents will be able to easily opt out of monthly payments or update their personal details like income or number of children through two coming IRS online portals. We'll explain those and details and more -- like what to do if you normally don't file a tax return or if you share child custody. You might also want to know how to claim up to $16,000 in child care expenses and how you will be receiving your payments. This story was recently updated.

Payment schedule for new child tax credit

The first child tax credit check will arrive July 15 and is automatic for households that qualify. The first six payments totaling half the credit will arrive monthly, targeting the same day of the month -- though you may not receive the payment on the exact same day every month, especially if you get a paper check instead of a direct deposit payment.

For Aug. 15, which is a Sunday, the IRS said the payment will go out Aug. 13. The checks will end in December, with the remainder of the credit coming next year after taxes. Here's a rough schedule: 

Timeline for the child tax credit payments

Monthly Maximum payment per child 5 and younger Maximum payment per child; 6 to 17
July 15: First 2021 check $300 $250
Aug. 13 $300 $250
Sept. 15 $300 $250
Oct. 15 $300 $250
Nov. 15 $300 $250
Dec. 15: Last 2021 check $300 $250
April 2022: Second half of payment $1,800 $1,500

Details for families considered 'nonfilers'

Payments will be automatic for those who filed their 2020 tax returns by the May 17 deadline, so nonfilers will need to file a simple one-time tax return to get their money, even if they're not usually required to file. This will let the IRS know your income and how many dependents are in your household who count toward the child tax credit benefits. Those taxpayers who did meet the deadline shouldn't file an amended return related to the new legislation. 

If you don't file a tax return, you may not get the full monthly child tax credit payment you're owed, at least not right away. The IRS said you will be able to update your income and dependent status so the agency is using your most recent info when calculating payments. One of the upcoming IRS portals will be designed for people who don't usually file taxes

How the 2021 child tax credit has changed from last year

The first thing to know is you won't get your child tax credit payments all at once in 2021. The credit part means the amount you owe on your 2021 taxes (which you file in 2022) will be reduced by the "credit" you gain from your eligible dependents. That could either reduce the amount you owe the IRS or else increase your tax refund. The idea is to bring you money sooner, which is why the checks will start coming in 2021 as "advance payments."

This logic also explains why your 2021 child tax credit is split into two parts. The first half in 2021 will come as advance monthly installments you can start using right away. The second half will apply to your 2021 taxes next year. 

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Eligibility and age brackets for dependents

How the payments will be divided between 2021 and 2022 might be confusing. For each qualifying child age 5 and younger, up to $1,800 (half the total) will come in six $300 monthly payments this year. For each kid between the ages of 6 and 17, up to $1,500 will come as $250 monthly payments six times this year. The IRS bases your child's eligibility on their age on Dec. 31, 2021, so 5-year-old children turning six in 2021 will qualify for a maximum of $250 per month. For both age groups, the rest of the payment will come with your 2021 tax refund when you claim the remainder of the tax credit in 2022. Here's how to calculate your family's total child tax credit amount, including a monthly breakdown.

If your dependents are 18 years old, they can qualify for $500 each. Dependents between the ages of 19 and 24 may qualify as well, but they must be enrolled in college full-time. Here's more on the financial breakdown for qualified dependents

2021 child tax credit maximum payments

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

Parents with a new baby or plans to adopt a child

If you have a baby in 2021, your newborn will count toward the child tax credit payment of $3,600. Children who are adopted can also qualify if they're US citizens.

Households with shared custody situations

For the first two stimulus checks, some parents who shared custody of a child but weren't married to each other were entitled to each claim money for the same child. That was only if they alternated years for claiming the dependent -- in other words, if one parent claimed the child on their taxes in odd years and the other claimed the child on their taxes in even years.

This is no longer allowed for the third check, and we're told it won't work that way for the child tax credit payments either. Here's what we know so far about the child tax credit and shared custody situations.

Income thresholds for parents

Income limits do determine how much you will receive and if you even qualify, though there is no limit on the number of children you can receive credit for as long as you're eligible. The amount you'll get will phase out for people with higher incomes: singles earning more than $75,000 per year, heads of household earning more than $112,500 per year and married couples earning more than $150,000 a year. Your child tax credit payments will begin to phase out by $50 for every $1,000 of income over those threshold amounts, according to Joanna Powell, managing director and certified financial planner at CBIZ.

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The larger child tax credit can help families that have faced financial hardship due to the pandemic. 

Sarah Tew/CNET

Families can opt out of partial monthly payments 

You aren't obligated to receive monthly child tax credit payments this year. Instead, you can choose to get one payment in 2022. (The upcoming IRS portals will allow you to do so.) You may want to opt out if you'd rather have one large payment for a projected expense next year, or if you're concerned the IRS might overpay you this year and you don't want to be saddled later with an outstanding debt. 

Access to child tax credit portals before next month

The IRS will launch two online portals by July 1. One portal is for people not normally required to file an income tax return, which will allow nonfilers to provide their information to receive payments. The second portal will allow families to update their information if their circumstances have changed, for example, if a new child has arrived or will arrive in 2021 who isn't reflected on your 2020 tax return. 

The portals can also allow families to opt out of the monthly payments if they prefer to receive one big payout when they file taxes in 2022. 

Payments will come by mail or direct deposit

The way your child tax credit money arrives could very well depend on how you receive your stimulus check money. Most people will receive child tax payments by direct deposit, but the IRS will also send paper checks and funds on debit cards. 

For stimulus checks, people who received Social Security benefits like SSI or SSDI got $1,400 payments on a Direct Express card. Veterans who don't normally pay taxes might also have a different delivery method. We'll update this when we have more information about the kind of debit cards you may receive.

If the IRS sends a check for too much money

You will have to return any overpaid amount to the IRS. The child tax credit rules aren't as flexible as the stimulus check rules. When you file your 2021 tax return (in 2022), if your tax situation isn't what the IRS has in its system and you weren't entitled to as much as you received, you'll have to give the overpayment back. One example of this happening is if you and the other parent of your child (who is not your spouse) are both paid for the child tax credit for the same dependent.

To avoid this tax inconvenience, make sure all your information is updated before the payments start arriving. The future portal will allow you to make adjustments.

What to expect after the 2021 monthly payments

The last advance payment of the child tax credit is scheduled to go out by Dec. 31, with the rest coming in 2022 with tax season. But President Joe Biden stated that the higher payments may last until at least 2025. He presented his American Families Plan proposal to extend the payments, stating in an April 28 speech: "Together, let's extend the Child Tax Credit at least through the end of 2025." It's up to Congress to approve his request.

For more information, here are the top things to know about the $3,600 child tax credit. Plus, here's how to track your tax refund and how to track your stimulus check.