The hundreds of dollars a month from child tax credit payments could go a long way – you could use it for expenses now or even prevent credit card debt during the holiday season. Personal finance expert Catherine Alford discusses the options.
The IRS launched a new online feature Monday that allows families currently receiving monthly child tax credit payments to report significant income adjustments, but those hoping changes will be reflected on the November payment need to take action quickly.
In order for the changes to go into effect in time, information must reported by midnight Monday, Nov. 1. Families who aren't able to abide by the deadline should enter changes by Nov. 29, the deadline for the December payment.
Only families who are already eligible for and receiving payments based on their 2020 tax return can use the Child Tax Credit Update Portal to update their income, the agency explained.
The portal seeks to help families whose incomes have risen or fallen substantially in 2021 compared to 2020, as a large income shift can either increase or lower a family's monthly payments.
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Those enrolling for the credit now will see larger remaining payments than families who have been getting them monthly since July, when the checks began.
That’s because the monthly money is an advance on a 2021 tax credit, half to be delivered this year and the rest to come when families file their taxes next year.
The American Rescue Plan passed in March expanded the existing child tax credit, adding advance monthly payments and increasing the benefit to $3,000 from $2,000 with a $600 bonus for kids under the age of 6 for the 2021 tax year.
Chicago Mayor Lori Lightfoot is among the elected officials across the country urging parents to take advantaged of the expanded credit.
Families that filed their taxes in the last two years or received past stimulus checks―are likely to receive automatic payments, the mayor's office explained, but those who didn't make enough income to be required to file taxes in 2019 or 2020 can still receive payments.
Families that have yet to sign up might want to do so in the coming weeks.
After December, families will have to file a tax return and wait to get the entire credit as a refund from the IRS. On the other hand, families claiming the credit now will get cash up front and receive the second half when they file 2021 taxes next year.
There’s also a limited window for families with eligible children to sign up if they didn’t get checks automatically. The site GetCTC.org, begun by Code for America in collaboration with the U.S. Department of the Treasury and the White House, will only be available through Nov. 15.
The credit will be continued through 2022, according to a framework of the now $1.75 trillion proposal by Democrats released last week.
