As it often goes, it depends. For many, it may be exactly the lifeline that they need to manage childcare expenses as they arise. For some, it may turn out to be a government loan payable by April 15 with interest they did not sign up for.
How do you know if it impacts you? The IRS bases its calculations on income you reported on your 2019 or possibly your 2020 return assuming they had already processed it. If you expect your 2021 income to increase materially compared to 2019 year or 2020 year, your child credit may be phased out and you may end up owing a portion or the whole amount of the advanced child credit back to the IRS (Please refer to Q C4 and Q C5 of the IRS Q&A for the phase-out amounts https://www.irs.gov/credits-deductions/2021-child-tax-credit-and-advance-child-tax-credit-payments-topic-c-calculation-of-the-2021-child-tax-credit ).
The maximum amount of the advanced child credit is $360 per month for each child who is five and younger and $250 per month for each child who is between 6 and 17. This represents half of the otherwise maximum child credit of $3,600 for each child who is five and younger and $3,000 for each child who is between 6 and 17.
If you normally depend on the child tax credit to reduce your tax liability or bring you a refund, receiving an advance credit would result in either reducing your expected tax refund or increasing your tax liability payable with the return. If your 2021 income increased and you no longer qualified for the credit, you would also need to pay back whatever you received in advance.
If you can afford to wait until the filing date to take advantage of your child tax credit, it may be a good idea to unenroll from the program. By now you may have already received your first July payment, but to unenroll from future payments, you need to do so by August 2nd, 2021. If you normally file jointly, then both you and your spouse need to unenroll. The process can be cumbersome, so brace yourself for multiple attempts working through the IRS website (https://www.irs.gov/credits-deductions/child-tax-credit-update-portal).
One other option if unenrollment fails and you still want to opt out from receiving the advance credit is to pay the estimated payment equal to the amount of the advance credit or increase your tax withholdings.