The American Rescue Plan (ARP), which was signed into law in March 2021, increased the Child Tax Credit (CTC) amount which was previously $2,000 per child to $3,600 per child for those under 6 and $3,000 per child for those age 6-17. The ARP also established that advance payments of the 2021 CTC would be paid regularly from July to December for 50% of the CTC that each household is eligible to receive. The CTC payments will be estimated based on the 2020 tax return for each household, or the 2019 return if the 2020 has not been filed yet.
Eligible taxpayers will have the opportunity to decline receiving the advance payments, if they prefer to receive the full CTC when the 2021 tax return is filed in 2022. Taxpayers who have changes to income, filing status, or the number of qualifying children after they have filed their 2020 returns will have opportunity to update their CTC eligibility information.
The Advance Payments are NOT extra money, but rather they are an advance on the Child Tax Credit that normally would factor into the amount due or owed on the tax return of eligible taxpayers. Read a clarification of this point here from CLA.
The IRS has said they will provide more information about advance payments soon. Read more about advance payments from the IRS here.