(CBS Boston) – The first set of child tax credit advance payments was paid to parents on July 15. Most people with banking information registered with the Internal Revenue Service (IRS) received their share of the $ 15 billion that day or soon after. But some people did not receive their child tax credit. Still others have received an amount that is different from what they feel is due. Here’s how updated credit works, as well as some reasons why payments could be delayed or inaccurate.
How does the withholding tax credit for children work?
The IRS pays a total of $ 3,600 per child to parents of children under the age of five. This drops to $ 3,000 for every child between the ages of six and 17. Half of the total is paid as six monthly payments and half as a tax credit for 2021. The IRS also makes a one-time payment of $ 500 for dependents aged 18 or on-time students. full until the age of 24.
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The maximum # Child tax credit was increased in 2021 to $ 3,600 for children under 6 and to $ 3,000 for children 6 to 17. #IRS has information about upcoming monthly payments at https://t.co/X085xjOZka pic.twitter.com/7J847Yk4j3
– IRSnews (@IRSnews) July 14, 2021
The updated child tax credit is based on the parents’ modified adjusted gross income (AGI) as reflected in their 2020 tax return. (AGI is the sum of salary, interest, dividends, alimony, retirement distributions and other sources of income less certain deductions, such as interest on student loans, support payments and pension contributions.) $ 1,000 of annual income beyond of $ 75,000 for an individual and over $ 150,000 for a married couple. The benefit is fully refundable, which means it is independent of the recipient’s current tax burden. Eligible families receive the full amount, regardless of what they owe in taxes. There is no limit to the number of dependents that can be claimed.
For example, suppose a married couple has a three-year-old and a seven-year-old, and has a joint annual income of $ 120,000 on their 2020 taxes. The IRS sends them $ 550 per month. That’s $ 300 per month ($ 3,600 / 12) for the youngest child and $ 250 per month ($ 3,000 / 12) for the older child. These payments will last until December. The couple would then receive the balance of $ 3,300 – $ 1,800 ($ 300 X 6) for the youngest child and $ 1,500 ($ 250 X 6) for the older child – as part of their repayment of 2021 tax.
Why didn’t I get what I thought I was?
For a program of this magnitude – the IRS estimates that payments were sent for 60 million children – some problems were inevitable. Most of the problems revolve around seemingly missing or incorrect payments. Public awareness of the updated child tax credit was limited and largely relied on private organizations. A Data For Progress study found that about half of eligible adults were not even aware of the program in the weeks leading up to the start date. So much of the confusion can boil down to eligibility. Here are some questions to ask yourself.
How old will your child be at the end of 2021?
Parents of a child who has not reached an age bracket this year receive the lower amount. This means that if a five-year-old turns six on or before December 31, 2021, parents will receive a total child tax credit of $ 3,000 for the year, not $ 3,600. This translates to $ 250 per month, not $ 300 per month. Likewise, if a 17-year-old turns 18 in 2021, parents should receive a one-time payment of $ 500, not monthly payments of $ 250 which total $ 3,000.
How much did I earn in 2020?
To determine the correct amount of a credit, the IRS uses the AGI of the most recent tax return it has. For most people, this is the 2020 tax year. The IRS will then review a taxpayer’s 2019 return. Without tax information from either of these years, the IRS will not issue advance credit. That is, unless a parent has signed up for a recent stimulus or submitted their information through the Child Tax Credit Non-Filer Registration Tool. Single parents earning less than $ 75,000 and married couples earning less than $ 150,000 should receive the full credit, depending on the age of their child. Those who earned more than these amounts will receive $ 50 less of the credit for every $ 1,000 of additional income.
When did I file my taxes and were they processed?
For the first payment of the updated child tax credit, the IRS used tax information submitted – and processed – before June 28, 2021. However, according to a report by National Taxpayer Lawyer Erin Collins, released As of June 30, over 35 million tax returns (about two-thirds of which were refunds) had not been processed or were in one of various stages of processing. So many people who filed their tax returns before the federal deadline of May 17 still had their credit determined by their 2019 tax return.
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How did I receive recent tax refunds and stimulus checks?
Child tax credit payments made by direct deposit should already have arrived. Mailed checks may take a little longer, depending on the vagaries of the US Postal Service. Those who have received a recent tax refund or stimulus check by direct deposit can expect this credit to arrive the same. If the IRS has outdated bank account information or if the account is inactive, the agency will revert to sending a physical check. Mailed checks can take up to four weeks to arrive.
My payment is missing?
After answering the previous questions, it can still appear that a child tax credit payment should have arrived. A parent can ask the IRS to trace the payment by submitting a taxpayer’s return regarding the refund (Form 3911). Those who expect direct deposit must wait five days after the official pay date to request a trace. Those waiting for a check in the mail must wait four weeks to request a trace.
What tools does the IRS have?
In recent weeks, the IRS has launched three different tools to help recipients with the updated child tax credit registry, verify their eligibility, and even change their bank account information. Let’s go over what these tools can do.
Child Tax Credit Update Portal
The Child Tax Credit Update Portal allows users to ensure they are registered to receive advance payments. It also allows beneficiaries to opt out of down payments in favor of a one-time credit when filing their 2021 taxes. The next deadline to opt out of monthly payments is August 2. (Subsequent withdrawal deadlines for future payments will be three days before the first Thursday of the month from which a person withdraws.) The tool now also allows users to add or edit bank account information for the direct deposit.
Other upcoming features on the portal include viewing payment history and updating dependents. To access this portal, users need an IRS username or ID.me account. ID.me is a login service used by various government agencies, including the IRS, Social Security Administration, and the Department of the Treasury, to authenticate users. Users need a valid photo ID to create an account.
Registration tool for non-filers for the child tax credit
The Child Tax Credit Non-Filer Enrollment Tool is intended to help parents of children born before 2021 who typically do not file taxes but are eligible for tax credit advance payments for children. This means that parents who have not filed their 2020 taxes, are not required to file and do not intend to file. (Parents who declared their dependents on their 2019 tax return should not use this tool.)
Users enter their personal information, including name, mailing address, email address, date of birth, relevant social security numbers, bank account information, and identity protection PIN. The IRS uses the information to verify eligibility and, once confirmed, will begin making payments. The IRS and experts advise using the tool on a desktop or laptop computer rather than a mobile device.
Child Tax Credit Eligibility Assistant
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The Child Tax Credit Eligibility Wizard allows parents to check if they are eligible to receive advance payments for the Child Tax Credit. Users will need a copy of their 2020 tax return or, failing that, their 2019 tax return. It is also good to estimate the income and expenses for the appropriate tax year, although the result may not be exact. The assistant asks several questions to determine eligibility, but does not ask for sensitive information. No entry is saved.