I understand that the CTC drops to $2000/child. My current CTC is $6600 this year. I have a 9 month old and 11 year old. To avoid owing the IRS money, should I opt out of advanced payments?
If you have a child under age 6 and a child over 6 but under 18 on your 2021 tax return, you would be eligible for $3600 for child 1 and $3000 for child 2. The credit amount is reduced $50 for every $1000 of income over the first threshold, so you would see a $700 reduction, and your credit amounts would be $2900 and $2300.
Whether you will owe depends on your overall tax picture. If you receive $3600 in advance payments, you would still see a credit of $1600 applied to your tax return. Whether or not you owe will depend on your total income, your total tax, your other credits, and your withholding. Remember that last year, you probably got a credit of $4000. Suppose your refund was $3000. That would mean that, not counting the credit, you owed $1000. If nothing else changes and you owe $1000 this year (not counting the credit) then you would get a refund of $600 instead of a refund of $3000. But you also would have gotten the advance payments.
The phase-out calculation is here