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Most families qualify for the child tax credit in July. Income rules, age limits and more

Some 36 million households that are eligible for the monthly child tax credit checks of $300 or $250 per dependent will be getting good news soon.

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The increased payments will put money in the bank of families who can benefit from more tax relief. 

Sarah Tew/CNET

An IRS notice about the expanded child tax credit might've already landed in your mailbox. Families that qualify should be receiving important details before automatically receiving the first advance payment on July 15. 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. 

As is often the case with anything tax-related, the child tax credit rules can get complicated. To receive the payments, your family needs to bring in less than a certain amount of income, and your dependents have to meet requirements. That includes babies born in 2021. The advance monthly payments are optional, so parents can choose instead to receive the entire lump sum when they file their taxes in 2022. We'll explain more below. 

Meanwhile, the White House has launched a new informational web page and there's talk about the American Families Plan extending the child tax credit for five more years. 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 recently updated. 

IRS letter informs families of coming July payments

Earlier this month, the IRS started sending letters to 36 millions families notifying them they may be eligible to receive monthly child tax credit payments, based on their federal income tax return from either 2019 or 2020. The IRS should also have details for eligible families that used an older IRS nonfilers tool to claim a stimulus check. 

For those nonfiler families that haven't done their taxes in a while and didn't receive stimulus checks, they can now use the "Non-filer Sign-Up Tool" to register for child tax credit payments. Or, if you were planning on filing a 2019 or 2020 return but just haven't gotten around to it yet, the IRS said to do so as soon as possible so your most recent information is on file for determining your payments.

The IRS will soon send eligible families a second letter with a personalized estimate of their monthly payment. 

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 onetime check in 2022
Ages 19 to 24, full-time college students $500 onetime check in 2022

Get up to $3,000 for each child ages 6 through 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. 

Those earning $75,000 or less (or couples who earn $150,000 or less) 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 earning $112,500 or less get the full 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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Non-tax filer families may qualify but need to take action soon

Child tax credit payments will be automatic for those who filed their 2020 tax returns or claimed all their dependents on their 2019 tax return. If you don't normally file taxes, because your income is too low or you don't have a bank account or a permanent address, the IRS won't know to send you a payment.

That means if you're considered a nonfiler, you'll need to act now to be able to receive the first round of payments this year. On June 7, the IRS opened a new online portal for households that don't traditionally file income taxes, so they can register their information. You'll need a number of things on hand before starting the process, including a mailing address, email address, tax information on your dependents and bank account information. 

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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 2021 child tax credit 

  • 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.