by Dana George | Published on July 26, 2021
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It's tough to receive less than expected, particularly if you already had plans for the Child Tax Credit funds.
The first monthly expanded Child Tax Credit payments began hitting bank accounts on July 15. These payments were promised as part of the American Rescue Plan that was signed into law by President Joe Biden back in March, along with $1,400 stimulus checks, boosted unemployment, and other aid.
If you've been anticipating the arrival of your Child Tax Credit payment, but the amount that arrived in your bank account wasn't quite what you expected, one of the following four reasons may be to blame.
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If your income dropped in 2020 along with millions of other Americans, the IRS needs to know. Otherwise, they'll base family eligibility on your most recent tax return filed. If you haven't filed your 2020 tax return, now is the time to get it done. And if you're not required to file a tax return, you must sign up for the Child Tax Credit through the IRS's non-filer tool.
Let's say you have a 5-year-old at home. Rather than receive the $300 expected, $250 was deposited into your bank account. The rule is this: A child must still be 5 years old or younger on Dec. 31, 2021, in order to receive a Child Tax Credit of $300. If your child turns 6 before the end of the year, they are automatically moved into the 6-year-old category and receive $250.
The same is true if you have a 17-year-old turning 18 before the end of the year. Since kids age out at age 18, you will not receive payment for that child.
If you've adopted a child or had a baby in 2021, the IRS does not know about the new family member. While it's never fun to wait, you can still file the entire Child Tax Credit when you fill out your 2021 tax return.
There are an estimated 35 million tax returns currently being held for review by the IRS. If your last return has not been completely processed for any reason, your Child Tax Credit will be held -- at least until all questions are resolved. That's because the IRS needs a completed tax return to determine income eligibility.
Let's say you learn that your return has been cleared and processed in September; you should receive your first Child Tax Credit payment in October. Even if you don't receive the credit this year, all is not lost. You will still receive the tax credit in its entirety when you file 2021 taxes early next year.
If you were counting on a larger Child Tax Credit than you received and you're concerned about the impact to your monthly budget, here are some quick and easy ways to save money in the upcoming months:
If you feel as though you're constantly playing catch-up, you're not alone. Hopefully, this year will be better than the last and we can all find our financial feet again.
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