The online pleas from parents seeking answers as to why they have not received advance payments of the child tax credit, or why the amount was not what they expected, are a reminder of how many millions of families live in financial advantage.
Under the American Rescue Plan, eligible families are entitled to monthly payments of up to $ 300 for each child ages 5 and under and up to $ 250 for each child ages 6 to 17.
A parent who tweeted wrote: "My wife and I made only [$ 50,000] last year and the IRS page said we are not eligible for our children's tax credit," adding that "they are 5 and 4 years old. ".
Understandably, there is a lot of confusion surrounding child tax credit payments. The rules are complicated. Hopefully, the answers below will clear up some of the concerns you may have.
We have five children: 17, 11, 9, 7, and 5. We received a $ 1,000 child tax credit payment. Shouldn't we have received $ 1300? We make less than $ 150,000 a year.
Repasemos los números y por qué probablemente recibió menos de lo que esperaba.
If you qualify for the maximum advance child tax credit, you would have received $ 250 for each child ages 6 to 17. Each child ages 5 and under is eligible for $ 300.
Generally, the age cutoff for the child tax credit is 16. But by 2021 alone, the age was extended to 17. What seems to be tripping many families is this: If a child turns 18 this year, their age is exaggerated. be eligible for a payment.
A similar problem involves 5-year-olds turning 6 this year. You will be counted as a 6 year old and as a result the payment is calculated on that basis.
So in this case, the couple's payment is $ 250 for each of the eligible children, including the 5-year-old who turns 6 and not including the 17-year-old who turns 18, for a total of $ 1,000.
My husband will not cash our children's child tax credit check, because he says we may have to pay the IRS back. Will we have to return this money?
If you think you will be overpaid, you can choose not to receive the payments instead of withholding the money. The IRS has created the Child Tax Credit Update Portal, which allows people to tell the IRS that they don't want advance payments.
During a recent online discussion, Ken Corbin, the IRS wage and investment commissioner and its director of taxpayer experience, addressed people's concerns about being overpaid.
"You can avoid owing taxes to the IRS by adjusting your withholding or canceling your enrollment and claiming the full credit when you file your 2021 tax return," Corbin said.
Is there any protection for low-income parents against having to pay back overpaid credits if their financial or family circumstances change during 2021?
Stay with me in this explanation. It is important that you understand who will and who will not have to pay back any overpayments for the advance child tax credit.
The child tax credit payments that will be distributed over the next six months are technically an advance of what people will claim on their 2021 tax return due next year. Half of the credit is distributed this year in monthly installments.
Since the IRS does not have 2021 tax returns yet and therefore cannot be sure of people's income or the number of children they can claim for the credit, the agency is using the 2019 tax returns or 2020 of the people. It also includes information that people provided in the IRS Nonfiler Online Tool.
Once they file their 2021 tax returns next year, some families may find that they received too much money. This additional income could result in a smaller refund or an increase in the taxes you owe for 2021.
When you file your 2021 tax return, you will need to compare the amount of the child tax credit advance payments you received with the actual credit allowed. Most families will get the remaining credit owed.
But some will find that they were overpaid and may have to return some or all of the money to the IRS.
In January, the IRS will send “Letter 6419” indicating the total amount of the advance child tax credit that was disbursed.
With people's incomes fluctuating so much due to the pandemic, and perhaps due to a change in who can claim a child, the American Rescue Plan, which authorized monthly payments of the child tax credit, includes a provision to prevent them from low-income households get a loan. surprise tax bill next year.
You may qualify for full payment protection if your modified adjusted gross income (AGI) for 2021 is equal to or less than $ 40,000 for a single taxpayer or married couples filing separately. The limit is $ 50,000 if you file as head of household and $ 60,000 if you are married and file jointly or file as a widower or qualified widower.
We have a small child, I entered the portal and excluded myself. However, I saw a message that I had chosen not to receive only half the payment. Does my spouse also have to opt out?
"In a marriage situation that files a joint return when one spouse discharges, the other spouse must unregister to stop payments," Corbin said. "If one of the spouses does not withdraw before August 2, half of the joint payment occurs."
For more information on the opt-out process, including a schedule of due dates for each monthly payment, see Topic J of the frequently asked questions about the child tax credit on irs.gov.
Will these count against me for federal benefit payments like Supplemental Security Income (SSI)?
“Child tax credit advance payments cannot be counted as income in determining whether you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any program. state or local funded in whole or in part with federal funds, ”Corbin said.
She added that these programs also cannot count payments as a resource in determining eligibility for at least 12 months after you receive them. If this has happened, you should contact the agency that issues your benefits, he said.
We have not yet filed a statement with our son. When can I use the online portal to add a child?
The IRS says that later this year the portal will add a feature that will allow it to report any qualifying children to the agency. And the good news is that there was an increase in monthly payments from the previous months after signing up.
The IRS is hosting events this weekend in select cities to help people sign up for the credit in advance. For information on free events, visit irs.gov.