IRS Child tax credit 2021 update – Advance payment date for November revealed and opt-out deadline you must act before
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THE DEADLINE to opt-out of the child tax credit for November is approaching, and those who don't want to receive the next child tax credit have until November 1, 2021, at 11:59pm to decline it.
While the October payments of the Child Tax Program have been sent out, many parents have said they did not receive their September check.
Families who have yet to receive their payments for July, August or September can trace the missing cash through the IRS website.
The online portal allows taxpayers to view payments and see if they're enrolled for advanced payments.
You need an IRS username and an ID.me account to check payments online.
The credits are worth $3,600 for kids below six in 2021 and $3,000 for those between six and 17. Families with college students ages 18 to 24 are eligible to receive $500.
The IRS rolled out the Child Tax Credit program in July, promising a total of up to $1,800 in monthly payments between July and December of this year.
The IRS recently announced that a glitch in the system caused delays in delivery of an estimated two percent of September payments.
The IRS is using 2020 tax returns to determine eligibility for the monthly payments, so those who have not filed their taxes yet could miss out on the benefits.
Additionally, parents who didn't make enough income to file a tax return could also be left out as the IRS would have no way of knowing if they qualify for the payments, as reported by CNET.
Read our child tax credit live blog for the latest news and updates...
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.
MORE WAYS TO SPEND THE CASH
Bruce McClary, of the National Foundation for Credit Counseling, told CNET: “If you’re in a situation where you have a lot of what I would refer to as the ‘toxic debt’ paying those balances off should be your No.1 priority.”
Alternatively, families could put the money towards a holiday once the Covid travel restrictions have ended.
Families could use the extra cash to treat their loved ones to a meal in a fancy restaurant or buy a luxury item such as a TV.
PAID LEAVE FOR FAMILIES
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 a 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.
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.
But there’s a chance your employer might offer paid leave – but it’s not common. In fact, only 19% of US workers have access to paid family leave through their employers.
DEMOCRATS WANT TO EXPAND CTC
Democrats in the senate are reportedly considering including the three-year extension in their $3.5trillion budget plan, as President Joe Biden asked congress to do back in July.
However, if extended it is possible the aid will be scaled back both to decrease costs and to convince moderate Democrats to support the package.
A Senate Democratic aide familiar with the ongoing discussions told Business Insider the child tax credit would drop back to $2,000 in 2024.
Families who owe little to no taxes, however, would get the full payment or “full refundability” permanently.
ILLEGAL IMMIGRANTS CAN RECEIVE CTC
Previously families with mixed-migration status were shut out of the program, but undocumented parents with children who are US citizens can now apply for this benefit.
While the child tax credit was expanded this year to include families with no income and undocumented parents with children who have Social Security numbers, the IRS said an “issue” caused families with parents who have an Individual Taxpayer Identification Number (ITIN) to not receive the first July payment.
Those families were supposed to get both the July and August payments last month.
Last week payments totaling $575million started being sent to as many as 1.2million mixed-status families, as reported by The 19th News.
OPT-OUT DEADLINES
The remaining deadlines are on the below dates by 11:59pm Eastern Time:
- November 1 for November 15 payment
- November 29 for December 15 payment
‘SURPRISE STIMULUS’
The new adjustments to the Child and Dependent Care Credit for 2021 mean that working American families who hit certain requirements will pocket thousands in extra stimulus funds.
It covers childcare costs up to $8,000, as well as costs for looking after a spouse or parent who can not care for themselves.
This increases to $16,000 in expenses for families with two or more dependents.
These child care expenses include everything from daycare to after-school programs to nannies to day camp and more.
Previously, the maximum amount you could claim for multiple children before was $6,000.
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 yesterday.
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.
FULLY REFUNDABLE CREDIT
The entire credit is fully refundable for 2021.
This means that eligible families can get it, even if they owe no federal income tax.
Previously, the refundable portion was limited to $1,400 per child.
WHAT IS AN EDUCATION SAVINGS PLAN?
Education savings plans lets savers open an investment account on behalf of the beneficiary’s future higher education expenses.
For example, a grandparent can open an account to save cash for a grandchild’s education.
These can be used to cover tuition, mandatory and room and board costs.
In general, the cash can be used to cover costs at any college or university, or elementary or secondary school.
MEANINGFUL IMPACT
David Newville, senior program director for tax benefits at Code for America, said: “In just two months, it’s already clear that the CTC is having a meaningful impact for working families in America.
“Now, we want to do all we can to ensure every family has access to the CTC.”
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.
SPOUSES MUST UNENROLL SEPARATELY
Married couples still must opt-out or request funds separately.
In fact, if only one spouse opts out, the family will still receive half the monthly payment amounts, according to Yahoo! Sport.
CTC 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 Aug. 13 alone, the IRS, and reported by CNBC.
FORM 2441
The IRS requires families to apply for the CTC by filling out Form 2441 and also prove income and complete information about the dependent care expenses.
Tax bills can be lowered by a lot because if the family qualifies for $8,000 CTC, they can reduce their tax obligations by $8,000 because its a dollar for dollar credit, according to iHeart.
Normal write-offs for an $8,000 sum might only cut down the tax bill by $1,000.
MAXIMUM CREDIT
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.
REPORTING SCAMS
They say that such errors are indicators of fraud.
And, people should be wary about clicking on shortened links as it could lead to fake websites, according to the IRS.
Any taxpayer who thinks they have fallen victim to a phishing attack should forward the message to phishing@irs.gov.
If it relates to their stimulus payment, Americans should report the incident to the Treasury Inspector General for Tax Administration via the website TIPS.TIGTA.GOV.
SIGNS TO SPOT SCAMMERS
They say to claim the check Americans must click on a link and send their details.
In light of these scams, the IRS has warned taxpayers that the agency does not send out unsolicited texts or emails.
The agency doesn’t instruct Americans to pay for checks via cryptocurrencies such as Bitcoin.
Officials at the IRS have warned taxpayers to be vigilant and have encouraged Americans to spot grammatical and spelling errors.
CHILD TAX CREDIT CALCULATOR
You can calculate how much you’ll get in child tax credits by using the free online calculator by Intuit Turbotax.
REASONS TO OPT OUT PART 3
Lastly, if you are concerned the IRS might send you an overpayment based on old tax information, and you don’t want to worry about paying any of that money back.
This would be the case if your household income went up or if a dependent is ageing out of an age bracket before the end of 2021.
REASONS TO OPT OUT PART 2
This would be ideal for families saving up, those who have put that money towards paying an outstanding debt or those who are used to receiving a bigger refund.
Opting out would also be a good idea if you know for certain that your household’s circumstances or tax situation will change and want to avoid updating your account information in the IRS portal.
This could be the case for separated, divorced or unwed parents who alternate custody of a child.
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 October, 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.
CHILD TAX CREDIT COULD BE EXTENDED, PART TWO
Currently, the Democrats control the Senate and the House by slim margins.
Senate Democrats are reportedly considering a three-year extension of the maximum $3,600 per child credit.
An aide said to be familiar with ongoing discussions told Business Insider that the extension could be included in the $3.5trillion budget plan.
CHILD TAX CREDIT COULD BE EXTENDED
President Biden previously called to extend the child tax credit payments until at least 2025 – but he can’t do it alone.
An updated measure would need to get through Congress before it reaches Biden’s desk.
Last time around, not a single Republican lawmaker voted for the $1.9 trillion rescue package.
WHY ARE CHECKS DELAYED?
If the IRS does not have your correct income information from your 2020 tax return, it may not be sending out checks.
The IRS may be using information from your 2019 tax returns to determine if you should be sent the checks or not.
If your income information changed in 2020 or you had a child, the IRS will automatically adjust your payments once your 2020 tax return is processed.
If you did not file taxes, there’s a tool called the Child Tax Credit Non-filer Sign-up Tool where you can add your information to see if you qualify.
Some 4million households will also be receiving paper checks, as opposed to a direct deposit. If the IRS does not have your deposit information, your check may still be in the mail.