Beginning July 15, the IRS will start sending taxpayers that filed 2019 or 2020 returns with qualifying children and advance payment of the Child Tax Credit. The payment will amount to ½ of the Child Tax Credit for 2021. The American Rescue Plan Act increased the credit for 2021 from $2,000 to $3,000 for children between 6 and 18 and increased the credit to $3,600 for children under 6 years of age in 2021.
The increases of $1,000 or $1,600 are phased out for taxpayers with modified AGI of over $75,000 for singles, $112,500 for heads-of-households, and $150,000 for joint filers and surviving spouses; and after applying the above phase-out rule to the increased amount, your remaining $2,000 of the credit is subject to the existing phase-out rules (i.e., the $2,000 of credit is phased out for taxpayers with modified AGI of over $200,000/$400,000 for joint filers).
Most eligible taxpayers will receive the advanced credit as a direct deposit to the bank account they used for their tax refund or payment. Individuals with a qualifying child or children that were not required to file a 2019 or 2020 tax return can apply on the IRS website. It is also possible to eliminate the advance payment so that that credit can be used in full to offset taxes due when filing your 2021 tax return.
For more information on and to file for your payment or cancel the advance payment see the IRS web site or contract your tax advisor. https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021