Nation & World

Families won’t receive a child tax credit payment for the first time in months. Why?

For the first time in months, eligible families will not receive a child tax credit direct payment.

The enhanced child tax credit, included in the $1.9 trillion American Rescue Plan signed into law by President Joe Biden in March, provided eligible parents with up to $3,600 per child over the course of a year. The first half of the credit was sent as monthly payments of up to $300 in 2021, and the second half can be claimed when filing taxes.

The payments typically went out on the 15th of each month, starting in July. The sixth payment was sent Dec. 15. But families won’t see the payments hit their banks accounts in January. Here’s what to know.

Why did the payments stop?

The American Rescue Plan only boosted the child tax credit through the end of 2021.

The law raised the credit amount from $2,000 to $3,600 per child under age 6 and $3,000 per child between 6 and 17. It also raised the age limit for qualifying children from 16 and marked the first time that part of the tax credit was sent as direct payments.

Single parents earning up to $75,000 a year and couples earning up to $150,000 a year were eligible for the full credit. Benefits were then phased out for higher incomes.

But, now, the expansion has expired, meaning monthly payments will no longer be sent out, and lawmakers have not taken action to extend it into 2022. The Internal Revenue Service had told lawmakers that they would have need to pass an extension by Dec. 28, for direct payments to be issued by mid-January, CBS News reported.

The Biden administration’s Build Back Better plan includes an extension of the boosted credit. The U.S. House passed the bill in November, but now it faces an unlikely passage in the Senate after Sen. Joe Manchin, a Democrat from West Virginia, said he wouldn’t support it.

Claiming the second half of the credit

Families can claim the second half of the child tax credit while they file their 2021 federal income taxes this year.

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Those who received child tax credit advance payments will need to compare the amount they received with the amount “that they can properly claim on their 2021 tax return,” the IRS said in December. That’s because the child tax credit payments families received were based on agency’s estimates of their eligibility in 2021.

Parents who received less than the amount for which they are eligible will claim a credit for the remaining amount when they file their 2021 income taxes. Those who received more may be required to repay some or all of the “excess payment” when they file their taxes.

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“In January 2022, the IRS will send Letter 6419 with the total amount of advance child tax credit payments taxpayers received in 2021,” the IRS said. “People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records.”

Parents had the option to forgo the monthly payments. Those who did can claim a lump sum when they file taxes.

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