Millions of American families have been taking advantage of the advance payments of the Child Tax Credit, but the Internal Revenue Service stresses there’s still time left to sign up for the remaining payments.
The latest batch of the monthly advance payments is now making its way into the bank accounts of some 36 million families. This wave of payments totals around $15 billion and the vast majority of families are getting their payments by direct deposit.
The advance payments of the Child Tax Credit (CTC) were made possible by the American Rescue Plan, passed earlier this year. It allowed qualifying families to get their CTC payments in advance installments, rather than just a refund when they file their income taxes.
Families can qualify for payments of up to $300 per month for every child under the age of 6, and up to $250 per month for each child between the ages of 6 and 17. Advance payments will total half of the overall tax credit due the taxpayer; the balance is paid out as a refund when the taxpayer files.
The IRS offers these details on the payments:
- Families will see the direct deposit payments in their accounts starting October 15. Like the prior payments, the vast majority of families will receive them by direct deposit.
- For those receiving payments by paper check, be sure to allow extra time, through the end of October, for delivery by mail. Those wishing to receive future payments by direct deposit can make this change using the Child Tax Credit Update Portal, available only on IRS.gov. To access the portal or to get a new step-by-step guide for using it, visit gov/childtaxcredit2021.
- Payments went to eligible families who filed a 2019 or 2020 income tax return. Returns processed by October 4 are reflected in these payments. This includes people who don’t typically file a return but during 2020 successfully registered for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov or in 2021 successfully used the Non-filer Sign-up Tool for advance CTC, also available only on IRS.gov.
- Payments are automatic. Aside from filing a tax return, including a simplified return from the Non-filer Sign-up Tool, families don’t have to do anything if they are eligible to receive monthly payments.
- Families who did not get a July, August or September payment and are getting their first monthly payment in October will still receive their total advance payment for the year. This means that the total payment will be spread over three months, rather than six, making each monthly payment larger.
Some American families may get a letter from the IRS, letting them know it’s not too late to sign up for advance CTC payments. The letter spotlights those who haven’t filed a 2020 income tax return with emphasis on those who aren’t normally required to file because their annual incomes are below filing thresholds.
Even these non-filing families may be eligible for the Child Tax Credit advance payments. The IRS says they should visit IRS.gov online for information on how to file a return and get their CTC credit.
September Advance Child Tax Credit payments hit a snag
The Internal Revenue Service says a technical issue led to about 2% of the qualified CTC recipients not getting their monthly advance credit amounts on time in September. The IRS has since sent out the payment to everyone affected.
Those affected included taxpayers who recently updated their bank account or address information using the IRS Child Tax Credit Update Portal.
The glitch mainly affected payments to married taxpayers filing jointly where only one spouse made a bank account or address change; this usually means payments are split into two – between the existing account or address and the new one.
Some recipients saw their payments delayed. Some saw a larger payment amount than normal, which led the IRS to adjust their three remaining monthly payments down by $10-$13 per child to compensate.
The IRS says it will send letters to all the taxpayers affected by the glitch and appreciates the patience of everyone.
For more information, check out the IRS website. Links to online tools, a guide to the Non-filer Sign-up Tool, answers to frequently asked questions and other resources are all available at IRS.gov/childtaxcredit2021, the IRS’ special advance CTC page.
Source: IR-2021-201
Ambassador Tax Services, Inc.
