BUCKHANNON — Beginning on July 15, families with children started receiving early payments from the IRS of 50% of the estimated amount of the Child Tax Credit that they may claim on their 2021 tax return during the 2022 tax filing season.
If the IRS has processed an individual’s 2020 tax return or 2019 tax return, their monthly payments will begin in July and conclude in December of 2021, based on those previously filed returns. After receiving the first half beginning this summer, the other half can be claimed when individuals file their 2021 income tax return. These changes apply to tax year 2021 only.
According to the IRS, if you are eligible to receive advance Child Tax Credit payments based on your 2020 tax return or 2019 tax return (including information you entered into the Non-Filer tool for Economic Impact Payments on IRS.gov in 2020), individuals generally will receive those payments automatically without needing to take any additional action.
Some individuals have reportedly expressed that they do not want to receive the advance tax credit payments. For those individuals, it is possible to unenroll through the Child Tax Credit Update Portal (CTC UP). CTC UP will allow individuals to unenroll before the first advance Child Tax Credit payment is made. According to a White House official, approximately 1 million people have chosen to receive their money in a lump sum during tax season instead.
Individuals who claim their children age 17 years or younger as deductions on their taxes are eligible to receive these Advance Child Tax Credits. The age limit was 16 but increased to 17, credited to the American Rescue Plan. This is determined by the age of the child at the end of the 2021 calendar. Therefore, children turning 18 in 2021, will not be eligible. For children over the age of 6, the American Rescue Plan also increased the amount of the Child Tax Credit from $2,000 per child to $3,000 per child, and from $2,000 to $3,600 for children under the age of 6. These amounts will vary based on income.
Single filers or “Head of the Household” who earn as much as $112,500 and joint filers making up to $150,000, will receive the full enhanced credit amount. For individuals making more than these amounts, their payments will began decreasing. The credit will reportedly completely phase out for single payers earning more than $200,000 or for married couples with a joint income above $400,000. According to the EITC/VITA Coordinator with the North Central WV Community Action Association, Inc. Suree Sarceno, the Child Tax Credit Update Portal on the IRS website will let individuals know how much they can expect to receive. However, according to the White House website, most families are receiving monthly payments of $250 to $300 per child.
It was noted by the IRS, that the fastest way to receive the advance payments is to file the tax return electronically and provide information about your financial account in order to receive the payments by direct deposit. If individuals receive a check rather than direct deposit, they can expect it shortly after July 15, as they will be sent out approximately the same time, to the address previously provided to the IRS.
Low-income families with children are eligible for this tax relief program. Even if individuals did not make enough to be required to file taxes in 2020 or 2019, they can still receive benefits, by selecting the “Non-filer” option. Sarceno noted that receiving the Advance Child Tax Credit will not affect any other government benefits received, including unemployment insurance, Medicaid, SNAP, SSI, SSDI, TANF, WIC, Public Housing or Section 8.