Details on the child tax credit payments still aren't set, but they're expected to start in July. Here's what we know right now.
Sarah Tew/CNETBy next week, an estimated total of 167 million third stimulus checks will have been sent out to eligible families. This includes Social Security beneficiaries whose checks will go out this weekend and arrive by direct deposit on April 7, per the IRS. (Track your payment here.) But the $1,400 checks aren't the only payments going out this year. Families with kids 17 and younger could qualify for the 2021 child tax credit (CTC), bringing them even more money later this year.
Under the $1.9 trillion stimulus bill, the expanded CTC gives eligible parents more money by allowing them to claim up to $3,600 for each child dependent. That's a significant increase of up to $1,600 over the $2,000 parents could claim last year for each dependent aged 17 or younger on their 2020 tax returns.
But with the IRS still processing millions of stimulus checks alongside hundreds of millions of tax returns between now and the new May 17 Tax Day deadline, where does that leave the child tax credit timeline? When would the first CTC payment arrive and how frequently would you get them? Could they become permanent? We'll explain that and more below. Meanwhile, here's seven tax credits for 2021, more information about unemployment benefits and what we know so far about whether a fourth stimulus check could happen. This story was recently updated.
2021 child tax credit: When will the IRS begin sending out the first payments?
We know a general timeline, but the specifics are yet to be pinned down. The American Rescue Plan stipulates that the CTC payments will start to arrive in July. A specific date hasn't been released, however, for when the payments will come. The IRS will make additional information about the expanded child tax credit available "as soon as possible," the agency said in a statement March 12.
How regularly will families receive the CTC payments?
The child tax credit will be paid out "periodically," according to the text of the stimulus bill, from July through December. The IRS hasn't shared how often it will be able to get the checks out, however.
Monthly delivery has been a goal, and the initial language used in earlier drafts of the stimulus bill. However, the language changed to "periodically," perhaps in part because of the extra burden placed on the IRS to also distribute tax returns and stimulus checks. In other words, some may have felt a monthly delivery cycle was too ambitious or unrealistic.
Watch this: Your tax questions answered in 3 minutes
3:26
"I think it might be a challenge to get into the monthly right out of the box," IRS Commissioner Charles Rettig said when asked about the timeline.
The amount you'd receive would be half of what you're owed for the year, under the new stimulus bill, and you'll receive the other half of the payment with your 2021 tax refund.
If paid out monthly, the payments would break down to up to $300 per month for each qualifying child age 5 and under, and up to $250 per month for each child between the ages of 6 and 17. Note that this amount phases out for those with higher incomes -- for single people earning more than $75,000 per year, heads of household earning more than $112,500 per year and married couples earning more than $150,000 a year.
2021 child tax credit amount
| Age | Amount you could get per child |
|---|---|
| Age 5 and under | Up to $3,600, or $300 a month if monthly payouts occur |
| Ages 6-17 | Up to $3,000, or $250 a month if monthly payouts occur |
How does the IRS plan to send the CTC payments: Direct deposit, mail or another way?
When the payments do start arriving, the Treasury and IRS could very well send out the payments the same way they do the stimulus checks, Joanna Powell, managing director and certified financial planner at CBIZ, told CNET.
It hasn't been confirmed by the IRS yet, but if the agency does use the same method as stimulus checks, here's how it would work: If you have direct deposit on file with the IRS, that's how you'll get your payment. If not, you'll receive your money as a paper check. It isn't clear if Social Security beneficiaries, like people in SSI, SSDI and veterans programs, would receive their CTC through their Direct Express card, the same way millions could get their third stimulus check.
Watch this: Stimulus check 3: How much money you'll get
2:32
Is there something I need to do to get the CTC payments? What if I already filed my 2020 taxes?
Taxpayers shouldn't file an amended return related to the new legislation and shouldn't take any other "unnecessary steps," the IRS said March 12. Rettig said payments will be automatic for those who file their 2020 tax returns by May 17, the new tax deadline.
However, nonfilers will need to file a 2020 tax return to get the credit, even if they don't usually submit tax returns. This will inform the IRS of how many dependents are in the household who would count toward the CTC benefits.
When will the IRS open its portal so I can make adjustments and correct errors?
The IRS said it will launch an online portal by July 1, Rettig said, but the IRS won't have the resources to build this until after tax filing season ends. Once the CTC portal is available, recipients can log in to update their information if their circumstances have changed. For example, if you have a child in 2021, the IRS wouldn't have that information on file yet, so updating those details could help you get a larger tax credit payout.
It's unclear if the payments will become permanent.
Sarah Tew/CNETWill I have to return money to the IRS if they accidentally send me more than I qualify for?
The CTC isn't as flexible as the stimulus check rules. If you receive more money than you should have, you will have to pay it back. Powell explained that when you file your 2021 tax return (in 2022), if your tax situation isn't what the IRS has in its system, and you weren't entitled to as much as you received, you'll have to give the overpayment back.
To avoid this tax inconvenience, make sure all of your information is updated before the payments start arriving. Powell estimates the portal will be open ahead of time so you can make any necessary adjustments.
Could I get all my CTC money as one large payment, rather than several smaller checks?
Absolutely, but not this year. If you thought you could cash in on all the CTC money in July, that's not the case. Instead, you can opt out of getting the periodic advance payments and receive a lump sum in spring 2022 as a credit when you file your taxes. You'll be able to use the online portal to opt out. Again, you wouldn't receive any money until 2022.
Is there a plan after the 2021 CTC payments end in December?
The final payment of the child tax credit is scheduled to end by Dec. 31, 2021. President Joe Biden, however, wants to make the higher payments permanent, White House Press Secretary Jen Psaki said: "We're having those discussions with Congress."
For more information, here are five things you should know about the $3,600 child tax credit for 2021. Plus, here's how to track your tax refund and your $1,400 stimulus check.
The Link LonkApril 01, 2021 at 12:00PM
https://www.cnet.com/personal-finance/child-tax-credit-for-3600-when-will-the-irs-send-your-payment-and-how-often/
Child tax credit for $3,600: When will the IRS send your payment and how often? - CNET
https://news.google.com/search?q=Send&hl=en-US&gl=US&ceid=US:en
No comments:
Post a Comment