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If you are confused about the child tax credit payment, keep reading as we are here to answer all your questions!

As a part of the democrats’ America Rescue Plan, the expanded 2021 Child Tax Credit payments were rolled out this week to nearly 35 million eligible families by the IRS. It is important to note that the changes are currently for the 2021 fiscal year only, but the expansion is included with the expectation that they might be extended. What this means for the families is that they will receive half of the credit as advance payment this year instead of monthly payments for the rest of 2021. In case the changes are extended, the whole credit would be received over 12 monthly installments. The families have the option to opt for receiving the whole credit in the following year instead. 

 

What is the amount of the credit?

The full amount of the credit and qualifications are as follows:

  • For each child aged 5 or younger: up to $3,600
  • For each child aged 6 to 17: up to  $3,000

These would be divided into 12 installments ($250 or $300) if the extension takes place.

Note that the age limit applies to the age of the child at the end of the fiscal year. So If your dependents are below the age of 6 on December 31, 2021, you are eligible to claim up to $3,600 per child as long as you meet the income requirements below.

Family upper-income qualification limits: 

  • Single filer — AGI below $240,000
  • Head of household — AGI below $240,000
  • Couple filing jointly — AGI below $440,000

 

What could be the reason for not receiving payment even though you qualify?

If the IRS doesn’t have your account information in the system yet and you think you are eligible, register soon at their Child Tax Credit Update Portal (https://www.irs.gov/credits-deductions/child-tax-credit-update-portal). After doing so and also checking and fixing any errors while at it, you can expect the payment in the August rollout.  

Failure to file tax returns in 2019 or 2020 could lead to missing information update in the IRS databases; especially if you had childbirth during that duration. In that case, use the IRS non-filer portal to register for future payments.

If you are a tax filer and still didn’t receive the payment you’re eligible for, check the Update Portal if the payment is coming via mail – which may take a bit longer. People who didn’t set up their banking details before June 28 would most probably now get a paper check via mail. 

If none of the above is the case with you and still your payment is missing: you might need to file a payment trace to IRS. That would require you filling a 3911 form and mailing it to the IRS. This is only recommended when it’s been more than 5 days since the scheduled deposit date and/or four weeks since the payment check was mailed. 

 

Received a payment but you had unenrolled?

If you received the money despite opting out of it, chances are you didn’t do it in time. Opt-out needed to be done at least 3 days before the first Thursday of the month since it takes 7 days to process the request. Also, if spouses file jointly, both need to unenroll.

 

Received a payment but the portal says you are not eligible?

This could be a system error at the end of the IRS. In this case, you will have to send the payment back to them if you are sure you aren’t qualified for it. Failure to return it in time could cause you to pay back more money when you file your taxes in 2022. 

 

Do you have to pay child tax credit money back at some point?

You won’t have to pay it back If you’re eligible for the full amount of child tax credit money. But if circumstances cause a change in income or change in the number of dependents then you don’t qualify for the full amount. In such a case if you receive the full amount, you may need to pay back the extra money. 

The IRS uses a “payment protection”, which means if you do get overpaid but fall below a set income level, you won’t have to pay back the overpayment. But above that income level, of course, you will have to pay back some or all of the extra money. 

If all of this has overwhelmed you and you still need help, we can take care of all your tax-related issues. Reach out to us by writing at info@evolutiontaxcenter.com 

 

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