Late registration for the kid tax credit score means fewer and bigger checks
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So far, two monthly payments totaling US $ 30 billion have been made to American families with children through the new improved child tax break.
Families who have eligible children but haven’t signed up – likely those who traditionally don’t file a tax return – still have time to sign up and receive monthly payments.
In fact, the remaining payments will be higher than if someone signed up before the start of July.
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That’s because the monthly money is an advance on a 2021 tax credit that’s delivered halfway this year and the rest comes when families file their taxes next year. The IRS said it will try to hand out the entire first half of the loan to families this year, even if they sign up late, and split the money into fewer, larger monthly checks.
“Even if parents haven’t received payment and they’re eligible, it’s not too late to sign up,” said Ashley Burnside, a policy analyst at the Center for Law and Social Policy. “You can use the IRS portal, that’s still an option.”
How it works
The American Rescue Plan, passed in March, expanded the existing child tax credit, added monthly prepayments, and increased the benefit from $ 2,000 to $ 3,000 with a $ 600 bonus for children under 6 for the 2021 tax year.
For a family with two children, ages 5 and 7 who are eligible for full credit, the amount they will receive is $ 6,600 ($ 3,000 for the 7 year old plus $ 3,600 for the 5 year old).
If they filed a tax return in 2019 or 2020 and had a direct deposit, the family received the first $ 3,300 of credit in six monthly payments of $ 550 that will run from July through December.
But if the same family traditionally fails to file taxes because they don’t earn enough, they would have to sign up to receive the monthly payments through the IRS non-filer tool. If the family missed the July payment but signed up in August – like about 1 million families – they would still get $ 3,300 before December.
“This means the total payment will be spread over five months instead of six, making each monthly payment larger,” the IRS said in an Aug. 13 statement. “For these families, each payment is up to $ 360 per month for each child under 6 years of age and up to $ 300 per month for each child 6 to 17 years of age.”
Every month, families who have just signed up are getting slightly higher payments as the IRS works to ensure they get the first half of the credit ahead of tax time.
Of course, families may have limited time to sign up for payments. According to the IRS, the non-filer portal will be open until October 15, 2021.
The U.S. Treasury Department, meanwhile, is in the process of expanding the loan filing options and has not set a final deadline, according to an official.
If a family does not register for the prepayments, they can still claim all of the credit, but must file a 2021 tax return. Even those who typically don’t file taxes for not making enough money can get the credit – the expanded version has been fully refundable to ensure it reaches the most vulnerable families.
However, experts say anyone with an eligible child should enroll as soon as possible, unless they belong to a family who knows they want to opt out and receive the benefit on a flat rate basis for the next year.