PARENTS and guardians could see an extra sort of stimulus in 2022 thanks to the Child Tax Credit.
If Democrats manage to extend the program throughout 2022 as part of President Joe Biden’s Build Back Better agenda, that would mean $600 credits for twelve more months — totaling $7,200.
Some legislators want to extend the benefit for just one more year. Previously, the Biden Administration proposed extending the enhanced credit through 2025, and some lawmakers would even like to see it become permanent, CNBC reported.
Meanwhile, the Child Tax Credit schedule has caused confusion for some parents who are missing their October payment.
For October, most families were slated to get up to $300 in child tax credits per child. You should check with the IRS to be sure your banking and address information is correct and up to date if you haven’t received your October payment.
As for November payments, the opt-out deadline is November 1 — just days away.
Read our child tax credit live blog for the latest news and updates…
WHAT IS THE ELIGIBILITY ASSISTANT?
The advance child tax credit eligibility assistant is the easiest way to check if you qualify for the payments.
To use it, you need to have filed your tax return for 2020 or 2019.
The IRS states: “If you don’t have a copy of the return and know your filing status and number of qualifying children you claimed, you may be able to estimate the total income from your tax return to answer all the questions. You can use the following to make estimates:
- Income statements such as W-2s and 1099s
- Amount of any expenses or adjustments to your income
You may still be able to benefit from the credit even if you aren’t working now or didn’t work in 2020.”
CHILDCARE COSTS COVERED
If parents regularly use a babysitter in 2021, they will be able to claim that as a child care expense for this tax year when tax filing time comes around in 2022.
CNET previously reported that it will probably be easier to claim child care credits for people and groups working in an official capacity, such as a summer camp program or licensed daycare provider, rather than a local teen.
The largest single child tax credit payment will be up to $1,800 per child next year but until then, people will get six smaller payments in total, CNET reported.
These “stimulus checks” are “advance payments,” to rent, food, and every day needs and if you’re expecting a paper check, keep a close watch on your mail this month.
HOW WOULD THE BUILD BACK BETTER PLAN EFFECT CTC?
On The White House’s website, President Joe Biden’s Build Back Better Agenda claims it will “extend the Child Tax Credit expansion in the American Rescue Plan, providing nearly 40 million households.”
The White House also claimed the tax cut is “the single largest contributor of the plan cutting child poverty nearly in half.”
PAYMENTS REDUCED FOOD INSUFFICIENCY IN MARGINALIZED GROUPS
The Bureau also found that child tax credit payments helped certain specific groups more strongly.
“The effects on food insufficiency are concentrated among families with 2019 pre-tax incomes below $35,000, and the CTC strongly reduces food insufficiency among low-income Black, Latino, and White families alike,” the study found.
CTC PAYMENTS ‘STRONGLY REDUCED FOOD INSUFFICIENCY’
The National Bureau of Economic Research released a paper on the impacts of the child tax credit payments and revealed startling findings.
First, the child tax credit payments “strongly reduced food insufficiency: the initial payments led to a 7.5 percentage point (25 percent) decline in food insufficiency among low-income households with children,” according to the study.
SOME FAMILIES COULD COLLECT UP TO $16K
For every family earning $125,000 or less, the CTC credit will cover 50 per cent of qualifying expenses up to $8,000 associated with the care of a child under 13 or a spouse, parent or other dependent who is unable to care for themselves.
If a family is caring for two or more eligible dependents, they can collect up to $16,000 in expenses.
For families earning between $125,000 and $183,000, it will cover up to 20 per cent, according to iHeart.
AVOID TAX CREDIT SCAMS WITH FAKE CHECKS, CONTINUED
But when the bank completes their review of the check and determines it’s fake, the victim is out both the money they were “supposed” to receive and the amount of the “unintended” overage they likely returned.
To protect yourself, the Better Business Bureau recommends doing your research to make sure the check is real and double-check if the government agency or organization issuing the payment actually exists.
AVOID TAX CREDIT SCAMS WITH FAKE CHECKS
One of the scams that experts say will likely re-emerge is phony checks.
Typically the scam starts when a recipient receives a check and deposits it in their bank account, Paige Schaffer, CEO of global identity and cyber protection services at Generali Global Assistance, said.
Schaffer says that the fraudsters then reach out and let them know that the amount was incorrect and ask them to return the overpaid funds.
And most importantly, although qualified Americans are guaranteed time off – it’s unpaid. This is problematic because the majority of Americans live paycheck-to-paycheck.
Compare this to other countries like Estonia, which offers new mothers up to 18 full months of paid leave.
There’s a chance your employer might offer paid leave – but it’s not common. In fact, only 19 percent of US workers have access to paid family leave through their employers.
Under the Family and Medical Leave Act (FMLA) of 1993, eligible employees can take up to 12 weeks off of job-protected leave each year.
But there are couple of issues with the act.
Not every employee qualifies for the FMLA. According to the Department of Labor, just 56% of employees are eligible for the FMLA.
SEPTEMBER TECHNICAL ISSUE
The third payment went out on September 17 but the agency said they had to fix a “technical issue” that caused delays.
The IRS said: “We know people depend on receiving these payments on time and we apologize for the delay.”
The agency said that less than two percent of eligible families were delayed and they should’ve received direct deposit payments or receive mailed checks “in the coming days.”
“The impacted group primarily included taxpayers who recently made an update on their bank account or address on the IRS Child Tax Credit Update Portal and affected payments to married filing jointly taxpayers where only one spouse made a bank or address change,” the IRS said.
REASONS TO OPT OUT
While it’s too late to opt out of this week’s check, there is still time to make changes to your account before the November and December payments.
Opting out essentially means you are postponing when you receive the remaining portion of the credit until next spring, reports CNET.
It is a good solution for divorced or single parents who have joint custody or claim dependents differently on their 2020 and 2021 tax returns.
Others might prefer to opt-out to avoid potentially having to pay the IRS money back, or would just prefer a bigger tax refund next year.
For example, you should opt-out if you prefer to receive one large payment next year instead of seven smaller ones.
VP HARRIS SAYS CHILD TAX CREDIT IS ‘WORKING’
Vice President Kamala Harris wrote about the success of the child tax credit on Twitter on Monday.
CHILD TAX CREDIT 101
Since July 15, the IRS started doling out monies to eligible families with the CTC worth as much as $300 per month for each child under 6 years old and $250 for each kid between the ages of 6 and 17.
About $15billion of the federal stimulus was “paid to families that include nearly 60 million eligible children” as part of the CTC made possible because of President Joe Biden’s $1.9trillion American Rescue Plan package passed in March.
The most recent checks helped reach an additional 1.6 million kids compared to the first month they were sent out.
A total of $15billion were distributed to the families of about 61 million children on August 13 alone, the IRS, and reported by CNBC.
OUT OF TIME
For those who have yet to file the 2019 or 2020 tax return, the time has run out. The deadline to file for the Child Tax Credit using the IRS’ non-filer tool was October 15 and you can now face up to thousands of dollars in penalties.
The only exceptions made will be for members of the military and others serving in a combat zone – they typically have 180 days after they leave to file returns.
Taxpayers in federally declared disaster areas who already have valid extensions also don’t need to comply with the October 15 deadline.
WEST VIRGINIA SENATOR WANTS CTC RESTRICTIONS
Sen. Joe Manchin indicated in September that he would not support extending monthly CTC payments.
“Don’t you think, if we’re going to help the children, that the people should make some effort?” He said when appearing on CNN.
The senator cited that there are “no work requirements whatsoever.”
HOW TAX CREDITS CURRENTLY WORK
As things currently stand, qualifying American families will get up to $300 per child per month until this upcoming December.
Considering the payments started in July, that would mean millions of American families would get $1,800 by the end of 2021.
The remaining half of the payments will be able to be claimed on your 2022 tax return. In total American families are set to get up to $3,600 per child.
The question is, can American families depend on at least $3,600 worth of payments each year after 2021?
BIDEN CALLS CHILD TAX CREDIT A ‘TAX CUT’
“My child tax credit is a tax cut for the middle class,” President Joe Biden wrote on Twitter.
“Middle class Americans will get a monthly payment of $300 for a kid under the age of 6, and $250 for kids over the age of 6.”
CHILD TAX CREDIT AGE CUT OFF
“Age is determined on December 31, 2021. If your child turns 18 this year, then they are not eligible for the monthly Child Tax Credit,” explained Congressman Steve Cohen.
“However, the American Rescue Plan did provide for a one-time credit of $500 for dependent children aged 18 and for dependent full-time college students aged between 19 and 24.”
SOME FAMILIES HAVE NOT RECEIVED OCTOBER PAYMENT
One parent vented on Twitter on Friday: “I didn’t get my September and October child tax credit.”
“I got July and August just fine but I’m missing two months.”
While another added yesterday: “I did not get my October child tax credit but I’ve gotten the ones previously. Really need this badly right now!”
It comes after a technical glitch last month meant around 2 percent of eligible families – amounting to 700,000 – didn’t get the credits on time.
Some families may have been skipped if they lived in the United States for less than half of 2019 or 2020, or if their financial situations in those years disqualified them from receiving payments–even if those circumstances have changed in 2021.
Families who have new babies or adopted dependents need to update their information in the IRS portal to make sure they receive the credit.
NEW TOOL OFFERED IN TWO LANGUAGES
To help those who may not have any other tech, a new mobile-friendly sign-up tool – GetCTC.org – launched on October 12.
Rolled out in collaboration with the White House, the US Treasury, and Code for America, a nonprofit tech organization, it’s designed to ensure eligible families can easily claim the child tax credit cash they’re due.
The website also lets you claim the three stimulus checks you’re eligible for.
It’s free to use, works on both desktops and mobile devices, and is available in both English and Spanish.
WHAT IF YOUR CHILD IS BETWEEN 18 AND 24 YEARS OLD?
A one-time payment of $500 is available for families of children ages 18 to 24.
The IRS has laid out a few eligibility conditions:
- A child who’s 18 years old must be claimed as a dependent.
- Children 19 to 24 must be attending college full time.
- Each child must have a Social Security number.
HOW LONG DOES BIDEN WANT TO EXTEND THE CHILD TAX CREDITS?
President Biden has called to extend the child tax credit payments until at least 2025.
But he would need help from Congress to make it happen.
Senate Democrats are reportedly considering a three-year extension of the maximum $3,600 per child credit, which could be included in a $3.5trillion spending package.