A SECOND batch of expanded child tax credit payments has started arriving in the bank accounts of millions of Americans.
Payments worth up to $300 per child will be sent out to an estimated 39 million households on Friday and should arrive in bank accounts days later.
The extra payments are part of Joe Biden’s expanded child tax credit program, which allows families to 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.
However, some people have reported their payments are yet to arrive, meaning the wait for help continues for some Americans in desperate need of assistance.
Families can use the Child Tax Credit Update Portal to track their payments with the IRS warning that paper checks will take more time to arrive and to look out for scammers.
Read our child tax credit live blog for the latest news and updates…
PAPER CHECKS WILL TAKE LONGER THAN DIRECT DEPOSIT
Some people who have not yet received the cash may expect a check in the mail.
“For those receiving their payments by paper check, be sure to allow extra time for delivery by mail through the end of August,” the IRS said in a release.
Those who believe they are eligible for the credits, but have not yet received any cash may not have signed up for the rewards.
But if you missed the deadline and not filing for whatever reason, IRS launched offers a backstop to help secure stimulus.
The agency’ can still send out critical funds once they acquire some key information by using their Non-Filer tool.
It’s possible that the person in question didn’t earn enough to be on the hook to file (and have not filed) a tax return for 2020.
But they can file a simplified tax return.
This option is intended to not let the “homeless, rural poor, and other historically under-served groups” be left behind.
Once the IRS has the proper information they can determine the person or family’s ability to secure Child Tax Credit payments.
AMERICANS CAN STILL FILE A TAX RETURN
If you are one of the many Americans who failed to file a tax return by the May 17 deadline, you are urged to do so.
Americans can still file a 1040 form and keep penalties and fines to a minimum, according to Kiplinger.
Even better, if a refund is coming after filing, the IRS doesn’t penalize taxpayers for filing a late return.
BACKLOG IN PROCESSING TAX RETURNS
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.
WHO IS ELIGIBLE FOR THE 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.
$13MILLION GOING UNCLAIMED
Still, up to 4 million American families have potentially been left behind or aren’t taking advantage of the funds, despite their potential eligibility.
There is a whopping $13billion going unclaimed; these monies are meant to support some of the lowest-income Americans, according to the Center on Budget and Policy Priorities study.
“The Treasury Department estimates that most eligible children will receive their payments automatically because their families filed returns in 2019 or 2020 or used the portal, but it’s crucial that we reach the remaining eligible children who may otherwise miss out,” the report concedes.
60MILLION CHILDREN ELIGIBLE FOR CHILD TAX CREDIT
Both the US Department of the Treasury and the Internal Revenue Service (IRS) announced last month that roughly $15billion of federal greenbacks were “paid to families that include nearly 60 million eligible children” as part of the CTC made available because of President Joe Biden’s $1.9trillion American Rescue Plan package passed in March.
The IRS has confirmed back in June that there have been 475 million economic impact payments amounting to $807billion after three separate rounds of stimulus over the last year.
HIGH PRESSURE TACTICS
Another red flag is calls or messages claiming they need sensitive information right away.
Those tactics are usually suspicious if the caller asks for information to be turned over immediately or if there are threats that you’ll lose your stimulus payment if immediate action is not taken.
SCAMMER RED FLAG- UNSOLICITED CALLS OR EMAILS
Spoofing technology has made it easier than ever for scammers to impersonate anyone, including government agencies.
To protect themselves, most experts recommend that consumers avoid picking up any calls from unfamiliar phone numbers.
If you do answer a call, and it’s about your stimulus payment, keep in mind that U.S. government agencies won’t ask you to pay anything upfront to receive your funds.
Additionally, government agencies won’t call, text, email, or contact you on social media to ask for your Social Security, bank account or credit card number.
UNEMPLOYMENT BENEFITS SET TO END NEXT MONTH
Unemployment benefits will end next month even though coronavirus cases are surging and calls for extra stimulus cash remain persistent.
The relief package, which has been in place for around 18 months, will end on September 6.
It’s estimated that around 7.5million Americans are set to lose out when the payments, worth $300 per week, stop in just a few weeks.
MAXIMUM CREDITS AVAILABLE
Every household with children that qualified for the latest $1,400 stimulus check is set to receive the child credit cash.
The maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:
- $75,000 or less for singles,
- $112,500 or less for heads of household and
- $150,000 or less for married couples filing a joint return and qualified widows and widowers.
If you earn more than this, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every $1,000 in modified AGI.
HOW MUCH IS THE CREDIT WORTH?
Most taxpayers have previously been able to reduce their federal income tax bill by up to $2,000 per child.
However, under the new law, families can get an increased tax break of $3,000 for every child aged six to 17 for the 2021 tax year only.
While you can get $3,600 for every child under the age of six.
Additionally, those with dependents between the ages of 18 and 24 who are enrolled in college full-time can receive $500 for each.
WHEN WAS THE TAX CREDIT PASSED?
The Child Tax Credit program was passed earlier this year under President Joe Biden’s American Rescue Plan and is setting up families with the ability to collect up to $3,600 for each child through December.
Already, Biden wants the aid to stretch on for years until 2025.
He tweeted: “As I’ve said again and again: The people who really need a tax break in this country are working families.
“That’s why my Build Back Agenda will extend the expanded Child Tax Credit we passed under my American Rescue Plan.”
DIRECT DEPOSITS COME SOONER
Americans who chose direct deposits instead of paper checks are likely going to get their money sooner.
For some counting on a paper check to arrive in the post, the IRS advised those families to “remember to take into consideration the time it takes to receive it by mail.”
There is also the possibility that the check can get lost in the mail or even stolen.
CAN SEPARATED PARENTS CLAIM THE CASH?
Separated parents who never married can each claim money for the same child – but only if they claimed the dependent on their tax returns in alternate years, i.e. one parent claiming the child on their taxes in odd years and the other in even years.
But if the child switches homes this year, the parents will need to agree on who will claim the child on their taxes this year.
OPT OUT OF ADVANCE PAYMENTS
Advance payments are optional and can you back out.
It’s already too late to opt out of August’s payment but you can dodge September’s by unenrolling by August 30.
To do so, simply visit the IRS website and use its free online portal.
If you miss this month’s deadline, you’ll get the next scheduled advance payment but you can still opt out in the future to receive a smaller lump sum.
NO CAP ON ELIGIBLE CHILDREN
There is no cap on the number of children eligible in one family though you’ll receive a reduced amount for kids aged between 6 and 17 – $250 to be precise.
Households can expect to receive $1,800 per child spread out over the year, or in one lump sum (if you opt out of advance payments). This should help cover costs like rent, food, and daycare.
Advance payments are optional, so you can opt out if you’re unsure about your family’s eligibility but have two weeks to do so.
It’s also advised you opt out if your household has a complicated tax situation or a change in income – that way you’ll avoid any tax headaches come Spring 2022.
WHEN ARE THE NEXT PAYMENTS?
The next payments are scheduled for the 15th of each month until December 15.
The payment for August was scheduled for August 13 because August 15 is a Sunday.
The IRS said about 86 percent of payments for July were sent via direct deposit.
The first batch of advance monthly payments was worth around $15billion and was sent to some 35 million families.
It’s expected some 36 million advance payments will be issued for August, according to the U.S. Department of Treasury’s data.
WAS YOUR CHILD TAX CREDIT POSTED?
The second installment of the expanded CTC payments was expected to hit the bank accounts of eligible families on Friday, with the checks ranging between $250 to $300 per child.
However, when some check the status of their checks last week they were told they would receive their payment by mail, despite opting for a direct deposit.
The US Treasury issued a statement amid the confusion after angered recipients aired their grievances on social media.
“Due to a technical issue expected to be resolved by the September payments, a small percentage of recipients — less than 15% — who received payments by direct deposit in July will be mailed paper checks for the August payment,” the department said.
86PERCENT OF PAYMENTS DIRECT DEPOSIT
The IRS said that 86 percent of payments for July were sent via direct deposit.
Families that have not received their payment should visit the Child Tax Credit Update Portal at IRS.gov.
This tool will tell parents if they are receiving the check by mail or post.
THRESHOLDS FOR TAX CREDIT RECIPIENTS
There will be another four monthly payments before the end of the year and families will be able to claim the rest of the child tax credit cash when tax returns are submitted in 2022.
The thresholds are set at $150,000 for married couples filing jointly and at $112,500 for heads of households and $75,000 for single filers.
MILLIONS TO RECEIVE $300
The new maximum credit is available to taxpayers with a modified adjusted gross income of $75,000 or less for singles; $112,500 or less for heads of household; and $150,000 or less for married couples filing a joint return and qualified widows and widowers.
A family with three toddlers could be looking at a monthly payment of up to $900.
CHANGE TO PAPER CHECKS IS ‘ONE-TIME ISSUE’
When some check the status of their checks last week they were told they would receive their payment by mail, despite opting for a direct deposit.
Tax experts said this change from direct deposit to paper checks for some is expected to be a one-time issue.
The Treasury recommends anyone in this situation to visit the Child Credit Update Portal at IRS.gov to see if you are receiving the money by direct deposit or paper check this month.
DETERMINED BY TAX RETURNS
Child tax credit payments are determined by the most recent tax return that was filed – either 2019 or 2020.
Americans should submit their tax return as soon as possible if they have not already done so.
But, low-income families that do not need to file tax returns are still eligible for the child tax credit payment.
In June, the IRS launched a free online tool for non-filers.
The tool is available for Americans who don’t earn enough to have to file an income tax return, which is usually used to calculate the credits.
BIDEN WANTS TO EXPAND TAX CREDIT
While the Child Tax Credit is not permanent, Biden is looking to extend the checks until 2025.
The IRS advises families who are waiting on a paper check to arrive to “take into consideration the time it takes to receive it by mail.”
There is also a chance that the check can get lost in the mail or even stolen.
You can also check if you are eligible for the payment using this Eligibility Assistant tool (both in English and Spanish).
If you filed a tax return by May 2020, your payments are automatic.
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