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Hey, parents! That IRS letter means child tax credit money is coming

The child tax credit payment program starts in less than a month. Millions of families are now receiving important information about it from the IRS.

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Keep an eye on your mail. An envelope from the IRS could mean advance payments are coming. 

Angela Lang/CNET

Though a letter from the IRS rarely means good news, this time it might. A colleague got an envelope in the mail from the tax agency and assumed it was an audit notice -- but it was about the advance child tax credit payments starting July 15. Around 36 million families in the US will get the letter, with as many as 92% of households with children qualifying for this significant tax relief. New rules under the American Rescue Plan boost the child tax credit from $2,000 to $3,600 max per child. 

Unlike previous years, half of the total amount for the payment will be distributed automatically in advance of partial payments through the end of 2021. Parents have the option of deferring the monthly installments to receive the lump sum when filing taxes in 2022. Starting next week, look out for information on Child Tax Credit Awareness Day and the new White House landing page, as well as new IRS online tools for enrolling and updating your details.  

Also, keep an eye out for a second letter from the IRS for a personalized estimate of your child tax credit payment amount. In the meantime, you can use CNET's child tax credit calculator to estimate your total and read more about how to spend your child tax credit money. We have updated this story. 

Who is receiving the IRS child tax credit letter?

Congratulations. If a letter that looks like this (see directly below) arrives in the mail...

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A copy of the letter from the IRS that could soon find its way to your mailbox.

CNET

...it means the IRS thinks you could qualify for the upcoming child tax credit, based on information it has from your 2019 or 2020 tax return -- or from details you registered using a nonfilers' tool (read more about the new nonfilers' tool for the child tax credit). 

Until there's a check in your hand or direct deposit in your bank account it's not a good idea to treat this letter as a guarantee of a coming child tax credit payment, but it appears your chances are good. As with all IRS correspondence, hold on to this letter for your records.

What if your family didn't get a letter from the IRS?

If a letter never shows up in your mailbox, that doesn't necessarily mean the IRS is skipping you over for the child tax credit payments. After all, the vast majority of US households with children will receive some portion of the money earmarked for parents. For example, while 36 million families are intended to get a letter, up to 39 million households could qualify for the credit. That means off the bat, 3 million households could see a check, but no confirmation letter. 

You might not get a letter if the IRS:

What you can do now:

  • If you're normally not required to file taxes -- someone the IRS calls a nonfiler -- you'll have a chance to update your details, like the number of children you can claim, using a "Non-filer Sign-Up tool" that is available now. 
  • If you haven't filed your 2020 tax return yet but plan to, the IRS encourages families to do so as soon as possible using the Free File system available on the IRS website. That will allow parents to update their banking information. There are also some free tax prep days in the next couple of weeks (see dates and cities here). 
  • If you moved, make sure the IRS and the US Postal Service have your current mailing address.
  • Make sure you know the eligibility and income rules for parents and their kids, including shared custody situations.
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Mark the date on your calendar for the first child tax credit check next month.

Sarah Tew/CNET

Which families will get a follow-up letter from the IRS?

If you do get the go-ahead from the IRS to receive child tax credit payments (which start July 15) you'll be treated to a second letter that confirms your eligibility. It also ballparks how much money you should expect to see in those checks. 

The 2021 child tax credit payment schedule gets a little complicated from here, but the upshot is that half the total money will arrive in increments from July through December, with the remaining money coming your way after you file taxes in 2022. 

You'll want to keep this letter so you can compare the estimate with what you eventually receive and to make sure you get the right amount for the right number of children you claim. In case there's a problem with child tax credit check delivery, this letter is almost like your receipt from the IRS, which you may need to reference in the future (like in a recovery claim on your 2021 taxes next year).

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For more information about the child tax credit, here's how you'll use the online IRS portals launching before next month and what happens if you have a baby this year.