IRS child tax credit 2021 update

WHAT DETERMINES YOUR CTC AMOUNT?

Child Tax Credit payments are determined by your child’s age and your household income.

There could be many reasons why you have not received your payment, such as the IRS does not have your correct banking information or your prior income tax returns prove you are not eligible.

About 4million households are waiting for a paper check instead of a direct deposit. Checks take more time to arrive, according to a recent IRS statement.

DO YOU HAVE TO PAY BACK YOUR CHILD TAX CREDIT?

If you don’t opt out and you receive more than you’re entitled to, you’ll be forced to pay it back once the IRS has processed your 2021 tax return.

The only exception is for individuals who earn less than $40,000 a year, who won’t be liable to repay overpaid credits.

HOW TO BE ELIGIBLE FOR CTC

To be eligible for the CTC, a child must be a US citizen, US national or a US resident alien and living with either a parent or guardian who’s claiming them for more than half of the tax year.

He or she also needs to be claimed as a dependent on the tax return.

The person also has to specify whether they want payments sent electronically, which is by far the most popular or by paper version in the post.

READ IRS LETTERS

Those families that may be eligible for the child tax credit would have received a letter from the IRS.

Some would have received a second letter that gave families a customized estimate of how much cash they will receive a month.

If you are unsure on whether or not you are set to receive cash, re-read these letters if they were sent to you.

SCAM WARNING CONTINUED

Lee added: “Once you click on that link it usually directs you to a fake IRS website where then you’re prompted to enter all of your personal information to claim this child tax credit.

“And just like that, scammers have all your information.”

The IRS says they will never ask you for money “using a gift card or wire transfer or painting via a cryptocurrency.”

Documents sent to families appear to be legitimate with emails titled: “Economic Impact Payments Status Available Jul 26.”

One text sent asks the receiver to fill out a fake eligibility form.

SCAM WARNING

Jim Lee, chief of the IRS Criminal Investigation Division, said Americans eligible for the cash are being targeted “using phone calls, emails, text messages, through social media.”

Lee told ABC: “Right now we’re seeing scammers trying to take advantage of the American public by attempting to gain information – using phone calls, emails, text messages, through social media – all attempting to target families eligible for this credit.”

He said “thousands” of text messages and e-mails are being sent every day, as scammers hope “they’ll get people to respond and fall prey to their scam.”

ARE NEWBORN BABIES ELIGIBLE?

Families can claim up to $3,600 per child under six and $3,000 for dependents aged six to 17.

Newborn babies are also eligible for the full $3,600 as long as they were born in the US.

Payments are being made in $300 or $250 installments and households will receive another five checks before the end of the year. The remaining amount can be claimed when tax returns are filed next year.

WHAT DETERMINES YOUR CTC AMOUNT?

Child Tax Credit payments are determined by your child’s age and your household income.

There could be many reasons why you have not received your payment, such as the IRS does not have your correct banking information or your prior income tax returns prove you are not eligible.

About 4million households are waiting for a paper check instead of a direct deposit. Checks take more time to arrive, according to a recent IRS statement.

UNEMPLOYMENT FELL

The economy appears to be slowly recovering as unemployment fell from 5.9 percent to 5.4 percent in July.

And around 900,000 jobs were added to the labor market last month, according to Yahoo Finance.

WHO QUALIFIES FOR THE CHECKS?

Single parents or parents who file their taxes as single will qualify for the full checks if they make $75,000 or less.

If you make more than $75,000, the monthly check is reduced by $50 for every $1,000 over the cap and eventually phases out completely.

Married couples who file taxes jointly and earn up to $150,000 a year qualify for the full payments, and the same situation applies where the payments eventually phase out.

WHAT TO DO IF YOU’RE MISSING A CHECK

If you did not file taxes, there’s a tool called the Child Tax Credit Non-filer Sign-up Tool where you can add your information to see if you qualify.

Some 4million households will also be receiving paper checks, as opposed to a direct deposit.

If the IRS does not have your deposit information, the second check that went out last week may still be in the mail.

BIDEN’S PANDEMIC PLEDGE

Biden has been seeking to increase government assistance to low- and middle-income Americans amid the pandemic which left millions out of work.

Such efforts saw him temporarily increase child tax credit payments for millions of Americans for 2021 and expand unemployment benefits until September.

Across the partisan divide, Republicans have said Biden’s generous “handouts” are driving inflation and discouraging unemployed Americans from returning to the workplace.

Biden’s food stamp increase also comes as yet another sharp policy reversal from that of his presidential predecessor, Donald Trump, who tried to limit eligibility for food aid.

The proposed restrictions were eventually overturned by courts.

HOW MUCH CAN YOU GET?

Each child in an eligible household under six years old is entitled to $300 per month, but it’s slightly less for any child older than six but under 17 – they will get $250.

The amount you receive will be based on either your 2019 or 2020 tax returns as well.

There are six payments in total worth to $300 each, that add up to $1,800 before the end of the year.

Two should have already come through with four pending on the rest of the months of the year.

When you file your tax return next year you will then get the same again (up to $1,800) in one lump sum.

If you have a dependent who is 18 years old, they can also qualify for $500. Plus any dependents between 19 and 24 may qualify as well, but they must be enrolled in college full time.

HOW TO KNOW IF YOU’RE ELIGIBLE

If a family makes above a certain income limit, they will not receive the Child Tax Credit cash so it’s mainly aimed at lower-income households.

While the income limits determine how much you will receive and if you qualify, there isn’t a limit on the number of children you can receive credit for.

Parents who make less than $150,000 together or a single parent who makes under $112,500 will be entitled to the full amount.

If you have a higher income you’ll get less.

You’ll get $50 less for every $1,000 of income over those threshold amounts.

INTERACTIVE ELIGIBILITY ASSISTANT

You can use the IRS’ interactive eligibility assistant to see if you are eligible for the child tax credit payment.

WHAT HAPPENS IF YOU HAVEN’T APPLIED YET?

Payments are automatic for those who filed their 2020 tax returns by the May 17 deadline or those who claimed on the 2019 tax return, so there’s nothing more you have to do.

But if you didn’t file taxes before the cut off you can use the IRS tool, called the “Non-filer Sign-up tool,” to get the money.

This will update the IRS with all your latest information including your income level and how many dependents are in your household.

Otherwise, you will have to wait to file the next tax return to get the full monthly child tax credit payment you’re owed. 

The IRS recently warned though that families may be experiencing delays as a technical glitch reportedly saw checks mailed in the post rather than sent electronically.

It caused a problem for four million households.

There are also warnings of scammers after any stimulus check you might receive so the IRS has also urged American’s to be cautious about sharing personal details.

INCOME THRESHOLDS

If a family makes above a certain income limit, they will not receive the Child Tax Credit cash so it’s mainly aimed at lower income households.

While the income limits determine how much you will receive and if you qualify, there isn’t a limit on the number of children you can receive credit for.

Parents who make less than $150,000 together or a single parent who makes under $112,500 will be entitled to the full amount.

If you have a higher income you’ll get less.

You’ll get $50 less for every $1,000 of income over those threshold amounts.

You can use the IRS’ interactive eligibility assistant to see if you are eligible for the child tax credit payment.

WHEN ARE THE NEXT CHILD TAX CREDIT PAYMENTS?

The payments are due to come in on the 15th of each month unless it clashes with a public holiday.

The second check was issued earlier this week, so parents will have already received this month’s payment, and the next check comes on September 15.

You need to be registered by August 30 though, to receive the next payment in a month’s time.

From now until December 15, deposits will be made monthly into accounts on file with the US’s Internal Revenue Service (IRS).

HOW TO BE ELIGIBLE

To be eligible for the CTC, a child must be a US citizen, US national or a US resident alien and living with either a parent or guardian who’s claiming them for more than half of the tax year.

He or she also needs to be claimed as a dependent on the tax return.

The person also has to specify whether they want payments sent electronically, which is by far the most popular or by paper version in the post.

You can check if you’re eligible for the credit by using an IRS online tool.

To use it, you’ll need to know your filing status, whether you can claim the person as a dependent and the person’s date of birth.

TAX RETURN BACKLOG

The IRS has experienced a fourfold increase in backlog in processing returns compared to 2019. 

For the 2021 filing season, the agency reported a backlog of 35 million tax returns that had yet to be manually processed, according to the National Taxpayer Advocate, a government watchdog.

They say the backlog includes about 16.8 million paper tax returns waiting to be processed, around 15.8 million suspended returns that require further review and about 2.7 million amended returns. 

Covid-19 was called the culprit. 

“The backlog resulted largely from the pandemic-related evacuation order that restricted employee access to IRS facilities,” the release stated. 

BIDEN ON CHILD TAX CREDIT

BIDEN’S PANDEMIC PLEDGE

Biden has been seeking to increase government assistance to low- and middle-income Americans amid the pandemic which left millions out of work.

Such efforts saw him temporarily increase child tax credit payments for millions of Americans for 2021 and expand unemployment benefits until September.

Across the partisan divide, Republicans have said Biden’s generous “handouts” are driving inflation and discouraging unemployed Americans from returning to the workplace.

Biden’s food stamp increase also comes as yet another sharp policy reversal from that of his presidential predecessor, Donald Trump, who tried to limit eligibility for food aid.

The proposed restrictions were eventually overturned by courts.

HOW TO BE ELIGIBLE

To be eligible for the CTC, a child must be a US citizen, US national or a US resident alien and living with either a parent or guardian who’s claiming them for more than half of the tax year.

He or she also needs to be claimed as a dependent on the tax return.

The person also has to specify whether they want payments sent electronically, which is by far the most popular or by paper version in the post.

You can check if you’re eligible for the credit by using an IRS online tool.

To use it, you’ll need to know your filing status, whether you can claim the person as a dependent and the person’s date of birth.

INCOME THRESHOLDS

If a family makes above a certain income limit, they will not receive the Child Tax Credit cash so it’s mainly aimed at lower income households.

While the income limits determine how much you will receive and if you qualify, there isn’t a limit on the number of children you can receive credit for.

Parents who make less than $150,000 together or a single parent who makes under $112,500 will be entitled to the full amount.

If you have a higher income you’ll get less.

You’ll get $50 less for every $1,000 of income over those threshold amounts.

You can use the IRS’ interactive eligibility assistant to see if you are eligible for the child tax credit payment.

WHAT HAPPENS IF YOU HAVEN’T APPLIED YET?

Payments are automatic for those who filed their 2020 tax returns by the May 17 deadline or those who claimed on the 2019 tax return, so there’s nothing more you have to do.

But if you didn’t file taxes before the cut off you can use the IRS tool, called the “Non-filer Sign-up tool,” to get the money.

This will update the IRS with all your latest information including your income level and how many dependents are in your household.

Otherwise, you will have to wait to file the next tax return to get the full monthly child tax credit payment you’re owed. 

The IRS recently warned though that families may be experiencing delays as a technical glitch reportedly saw checks mailed in the post rather than sent electronically.

It caused a problem for four million households.

There are also warnings of scammers after any stimulus check you might receive so the IRS has also urged American’s to be cautious about sharing personal details.