The IRS is notifying more than 36 million households by mail that they may be eligible for the expanded child tax credit effective in July and urging those who have not filed their 2019 or 2020 individual income tax returns to do so as soon as possible.

The Biden Administration's American Rescue Plan, passed earlier this year, increased the child tax credit for eligible families through the end of 2021 and allows monthly cash advance payments from July through December. Families who do not report income or pay income taxes may also apply for the credit for their eligible children.

With the expansion, eligible families can receive up to $3,600 for each child under age 6 and up to $3,000 for each child between ages 6 and 17 (including children who turn 17 by the end of 2021).

Up to 50% of the payment is paid in advance, so each month beginning July 15, each child can receive a check for up to $300 or $250.

The regular child tax credit applies to families who do not qualify for the expanded credit, with a single credit of up to $2,000 per eligible child at the end of the year.

The expanded credit phases out as income exceeds $75,000 (for single filers) or $150,000 (for married filing jointly). The expanded credit only applies through 2021, but Biden's pending American Families Plan hopes to extend the expanded credit through 2025.

Within the next few weeks, we expect to receive a letter notifying us of our tentative eligibility for the expanded child tax credit based on taxpayer information on file with the IRS. Families who are determined to be eligible will also receive a second letter with specific credit amounts.

In most cases, taxpayers do not need to take any action to claim the child tax credit as long as the IRS has recent tax return information on file.

However, those who did not file a return for either 2020 or 2019 and did not use the non-filer tool to claim their stimulus check last year should file their tax return as soon as possible.

This includes persons of no fixed address and family members who have little or no income and do not normally pay taxes. Unlike the normal tax credit structure, under the expanded plan, even parents whose credits exceed the amount of taxes paid can receive the full amount of the tax credit.

The IRS also plans to launch an online calculator that families can use to determine eligibility. Another tool, called the Child Tax Credit Update Portal, will eventually allow people to withdraw from prepayment and check their deduction status. These will be added to the IRS website in the near future.