The sixth – and potentially the last – payment ofis expected to hit the bank accounts of American parents on Wednesday. Unless lawmakers renew the benefit, parents of 61 million children will not receive additional monthly checks in 2022.
The sixth payment will be deposited directly into the bank accounts of millions of parents on December 15, although some families may receive the check in the mail, which could add several days to the delivery delay.
The enhanced child tax credit, which was extended through President Joe Biden’s US bailout, is credited with the lifting millions of children out of poverty through monthly cash payments, which anti-poverty advocates say have helped families pay for basic expenses like food, rent and education expenses. But the future of the Advantage remains in limbo as Congress debates the Build Back Better Act, which would include a monthly payments.
The CLC “tackles rural poverty,” said Whitney Kimball Coe, director of national programs at the Center for Rural Strategies. Payments “are not a paycheck, not a living wage – they are a bridge to hope, to a good night’s sleep, so families don’t have to choose between food and keeping the lights on. “.
She added: âMy community cannot afford to lose its bridge.
Until now, monthly checks have been issued on or around the 15th of each month. The Build Better Lawto keep payments on schedule and land on accounts by Jan. 15, the IRS has told some lawmakers.
Since the checks began in July, the IRS has sent more than 200 million payments totaling more than $ 93 billion, the agency said on Wednesday.
Here’s what you need to know about the sixth CTC check.
When does the child tax credit arrive in December?
The fifth payment date is Wednesday, December 15, with the IRS sending most checks by direct deposit. For most families, the agency relies on bank account information provided through individual tax returns or through its Non-Filer tool, which is for people who don’t normally file tax returns.
The bank deposit will be labeled “CHILDCTC”.
How much will I receive in the December CTC payment?
As with previous checks, eligible families with children under 6 will receive $ 300 per child, while those with children 6 to 17 will receive $ 250 per child.
Eligibility is largely income-based, as lawmakers wanted to target payments to low- and middle-income families. To receive full payments, single taxpayers must earn less than $ 95,000, while joint filers must earn less than $ 170,000. Payments are reduced if taxpayers earn more than this amount.
Some parents who signed up for checks more recently might see a larger lump sum, as if they were missing payments from previous months andreceive payment before the end of the year.
What if I haven’t received any payment?
The IRS says qualifying families who haven’t received any payments from the CTC can claim the full amount on their 2021 federal tax return.
For families with children under 6, the total CTC amount is $ 3,600 per child. Families with children ages 6 to 17 can claim the full amount of $ 3,000 per child if they have not received monthly payments.
What happens to the CLC after December?
Without the passage of the Build Back Better Act, monthly checks will cease after December 15th.
Despite this, the enhanced CTC still has a benefit that parents can claim on their 2021 taxes before the April 15, 2022 filing deadline. This is because the expanded CTC has split the benefit between monthly checks, issued. starting in July and ending in December, with the other half to be claimed on tax returns.
Under the enhanced CTC, families with children under the age of 6 received a tax credit of $ 3,600 in 2021, of which $ 1,800 was sent via monthly checks, or $ 300 per month. The remaining $ 1,800 will be claimed on their 2021 tax return in early 2022, which will bolster tax refunds for these families.
Families with children aged 6 to 17 benefit from a tax credit of $ 3,000. Of this amount, $ 1,500 was sent via monthly checks, or $ 250 per month. They will also be able to claim the remaining tax credit – $ 1,500 – on their tax returns next year.
Without an extension of the expanded CTC, the tax credit will revert to its pre-2021 form. Under these guidelines, the CTC will increase to $ 2,000 per child starting in 2022 and will not include monthly checks. Parents will claim the tax credit on their tax return once a year.
The pre-2021 CTC also has income restrictions which mean very low income families are generally not able to receive all or part of the benefit. This is because the old CLC required families to pay tax in order to receive the benefit, which many poor families do not.
Will I owe taxes on CTC payments?
No, because the IRS says the payments are not considered income. These are âprepayments of your child tax credit for the 2021 tax year,â according to the IRS website.
However, there is a catch that could cause a headache for some taxpayers.
The IRS based a family’s eligibility on their last tax return, which for most people is their 2020 return. Millions of people lost income and jobs that year due to the pandemic, but many regained their financial footing in 2021. If that happened and their income exceeded the income thresholds that determine eligibility, they might have received full payments from the CTC – but not actually received been qualified for them.
In this case, they will have to repay the overpayments to the IRS when they file their 2021 tax returns early next year.
What happens when I file my taxes?
The IRS says it will send the 6419 letter in January to taxpayers who received the CTC payments. The tax agency asks people to keep the letter and refer to it when they file their 2021 tax return to ensure that the amount they received is correctly reflected on their return.
Even though the IRS says that obtaining CTC payments will not delay your tax refund, there is a risk of errors that could delay your reporting to the tax agency. For example, if you mistakenly say that you received $ 1,500 in advance payments but actually received $ 1,800, the IRS will note the discrepancy with its records and potentially flag the return for review.
Such snags contributed to thethat were withheld at the IRS earlier this year, delaying tax refunds for millions. Granted, part of the delay was caused by staff issues related to the pandemic, but some taxpayers incorrectly reported the amount they received from stimulus payments, causing their returns to be flagged for review. .
Basically, to make sure your tax return is processed quickly at the start of the next year, it is important to verify your letter 6419 and include the correct payment amount on your return.