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Child tax credit 2022 update – ‘$3,600 stimulus’ check replacements revealed as calls to extend direct payments grow

The US Sun
The US Sun
 2022-01-19
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- Why some parents were only paid half their child tax credits today

- Last child tax credit payment amount explained - how much will you get?

- Four days until $1,800 payments to families - are you eligible?

- Child tax credit 2021: How much is it and when will I get it?

THE monthly child tax credit payments have come to an end for now – but there are other ways you can get cash.

While December marked the final month for the expanded child tax credits you are still likely owed another payment.

The child tax credits payments in 2021 were worth up to $3,600 per kid, with eligible families receiving up to $300 per child each month.

With December’s payment, American families should have received up to $1,800 per child.

That means you’ll be able to claim the remaining $1,800 on your tax return.

However, there are still growing calls for direct payments to be extended into 2022. The White House has also floated the possibility of double checks being sent out to make up for payments being missed in January.

Read our child tax credit live blog for the latest news and updates...

  • What child care rate is considered affordable?
  • A child care rate of no more than 7percent of a family’s household income is considered affordable, according to the U.S. Department of Health and Human Services (HHS).
  • Currently, most families have reported that they spend no less than 10percent of their household income on child care expenses.

The cost of child care

According to the 2021 Cost of Care Survey, most families are struggling to afford child care.

85percent of families surveyed said they spend at least 10percent of their household income on child care costs.

More than half (57percent) of families surveyed spent more than $10,000 on child care in 2020.

59percent of families are on track to spend more than $10,000 on child care in 2021.

Repayment protection, continued

You will not qualify for any repayment protection if your modified AGI is at or above the amounts listed below, based on the filing status on your 2021 tax return.

  • $120,000 if you are married and filing a joint return or if filing as a qualifying widow or widower
  • $100,000 if you are filing as head of household
  • $80,000 if you are a single filer or are married and filing a separate return

Ways to qualify for repayment protection

If you qualify for full repayment protection, you won’t need to repay any excess amount paid to you by the IRS.

You qualify if your main home was in the United States for more than half of 2021.

Also, based on the filing status of your 2021 tax return, you qualify for repayment protection if your modified adjusted gross income (AGI) for 2021 is at or below the following amount:

  • $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower
  • $50,000 if you are filing as head of household
  • $40,000 if you are a single filer or married and filing a separate return

Tips to fight inflation

  • Keep checking your bills regularly: You want to make sure there are no errors or overcharges.
  • Research your providers: You want to ensure you’re getting the best deals and the most for your dollar.
  • Understand your energy bill: When you know how much you’re using, it will help to keep costs down.
  • Cancel any unused services: This can pertain to any subscriptions, streaming services or any service which you do not use often but are paying for monthly.
  • Look for discount codes or coupons: Stores have sales and deals. Every penny counts when trying to save. Time your grocery shopping wisely.

Highest inflation in 40 years

The average American consumer now spends an extra $250 a month as inflation has hiked the cost of everything from groceries to fuel.

The latest numbers released by the Labor Department today show a 7 percent increase in December.

That is the highest rate of inflation in 40 years.

No checks, even as inflation grows

American families that received child tax credit payments over the past few months are now facing a January without an extra cash boost from the government.

This comes as inflation rose 7 percent over the past year, the highest since 1982 and the fastest pace in nearly 40 years, according to the Labor Department.

For many, it is the first time since July 2021 without a child tax credit check, which has helped many households buy the basic necessities even as inflation rose.

Returning a Child Tax Credit payment

If you have to return a child tax credit payment, and the payment was a paper check and you have not cashed it, write “Void” in the endorsement section on the back of the check and mail it to the appropriate IRS location depending on your state.

If the payment was a direct deposit or a check that is now cashed, submit a personal check or money order payable to “US Treasury” to your appropriate IRS location.

With either return, include a brief, written explanation for the reason for the return. Be sure to include if you want to unenroll from future monthly advance Child Tax Credit payments.

  • What is the CTC income cap?
  • Single parents or parents who file their taxes as single qualified for the full checks if they make $75,000 or less.
  • If you make more than $75,000, the monthly check was reduced by $50 for every $1,000 over the cap and eventually phases out completely.

Tool to track payments

There is an online portal that Americans can use to check the status of their checks.

This tool allows you to view your payments and check and see if you’re enrolled for advanced payments.

You need an IRS username and an ID.me account to check payments online.

  • Manchin said no
  • Democratic Senator Joe Manchin voted no and continues to express his dismay with the provisions related to moving forward with the CTC as it stands.
  • The West Virginia senator voted against party lines and effectively put an end to CTC until a compromise can be reached on the nearly $2trillion social spending plan.

Will there be future CTC payments?

Right now, Congress is back in session but there’s no word yet on when they will return to negotiations.

The White House has suggested the IRS could send out double payments in February as an alternative, if BBB is passed.

The total child tax credit is $3,600 annually for children under age six and $3,000 for children ages six to 17, with an income cap of $150,000 for couples who file jointly.

What’s next for CTC proposals?

Senators are expected to resume negotiations over child tax credit payments in January now that they’ve returned from holiday break.

A major breakthrough will be needed to avoid a lapse in payments, The Atlanta Journal-Constitution reported.

The checks went out to approximately 35million households covering 88 percent of children in the US, according to the news outlet.

How are CTC amounts determined?

The amount of advance child tax credit payments you received during 2021 is based on the IRS’s estimate of the CTC amount you are allowed for the 2021 tax year.

The law requires this estimate to be based on two primary sources of information.

The first is your 2020 tax year return. If that return is not available, the IRS will refer to your 2019 return.

Second, any updated information you provide to the IRS in 2021, including any changes to the number of qualifying children, changes in your income and changes in your filing status.

The agency understands that family and life situations change throughout any given year.

That’s why you may receive a total amount of advance payments which may be more than the amount of CTC you’re allowed.

When was the CTC established?

The child tax credit was established in 1997.

It has been around for more than two decades and a proposal in the American Rescue Plan, which was signed into law last March, increased the amount in payments.

“Previously, families received a credit worth up to $167 per month per child ages 16 and under,” Vox reported.

  • CTC age cut-off
  • “Age is determined on December 31, 2021. If your child turns 18 this year, then they are not eligible for the monthly Child Tax Credit,” explained Congressman Steve Cohen in 2021.
  • “However, the American Rescue Plan did provide for a one-time credit of $500 for dependent children aged 18 and for dependent full-time college students aged between 19 and 24.”

Avoid further delays

A key way to avoid further delays if you received a child tax credit payment in 2021 is to look out for a letter from the IRS this month, if you haven’t already gotten one.

The letter will be numbered “6419,” which contains key information about the number of eligible children and the total amount of tax credit payments received in 2021.

Also, assuming you qualified for the third round of stimulus, you should be getting another letter “6475.”

This letter helps to determine whether or not you can claim the Recovery Rebate Credit on your 2021 tax return.

May have to wait for tax refund

Families that claimed child tax credit payments are at the top of the list for risks of facing a delay.

If there is a mistake including incorrectly claiming how much you received from the advance child tax credit payments, or if there is a mathematical issue – you could face weeks or even months of delays.

But assuming you file correctly on January 24 – you still might be in for a wait.

This is because the IRS cannot issue child tax credit refunds until mid-February, as a result of a 2015 law known as the PATH Act that cracks down on fraudsters.

Expanded Child Tax Credit

Families who were eligible for the expanded Child Tax Credit but did not receive any monthly payments in 2021 will still be able to claim the full amount on their 2021 tax returns.

Some families opted out of receiving the monthly payments in favor of receiving one lump sum or because they were worried about owing money on their taxes.

Parents who didn’t receive advance Child Tax Credit payments could receive up to $3,600 per child under the age of six when tax returns are filed next year.

For children ages six through 17, that amount is up to $3,000.

If you had a newborn baby in December, you will also be able to claim up to $3,600.

The IRS said that parents who give birth on December 31 can claim the tax credit for newborns providing the eligibility test is met.

WH economic adviser calls CTC expansion a puzzle

One of Joe Biden‘s economic advisors Heather Boushey gave a message to Yahoo Finance recently about the role of the child tax credit in the economy at the moment.

“The Child Tax Credit is a piece of that puzzle but it is a part of the overall package that the president put in place,” said Boushey.

“We remain optimistic that we will continue to see the economy moving forward.”

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