The monthly child tax credit payments may be over, but families now face a new hurdle: Filing for the remaining portion they’re owed.
An estimated 40 million households will be applying for the benefit this tax filing season, which, thanks to a bevy of coronavirus-related claims, is already expected to come with significant challenges and delays.
The child tax credit, which was expanded to more people and for a larger amount in early 2021, was designed to arrive in two chunks to nearly all families with children. The first payments were in six monthly increments. The second would come with families’ tax returns in 2022 — if they know how to get it.
“There’s a huge, huge knowledge gap here,” said Jen Burdick, a lawyer at Community Legal Services of Philadelphia who has been helping people sign up for the child tax credit. “I think a lot of people don’t know that there was a child tax credit for all of 2021, and while they may have heard of some of the advanced payments, they don’t realize that those are only for the latter six months — you are still owed the child tax credit for the first six months of 2021, and then in order to get that you have to file taxes.”
For many people who are already planning to file taxes, that may not be a challenge, though they will have to ensure they input the correct amount of child tax credit payments they have already received so that the Internal Revenue Service can reconcile how much they are due.
But for the first time this year, people who earn very little or nothing are eligible for the credit. Typically, they do not have to file taxes and may not be familiar with the process. This is the most vulnerable group, and the one for whom getting the credit is most important.
According to a report from the Columbia Center on Poverty and Social Policy, an estimated 4 million eligible children have not received any child tax credit payments, and those families will have to file a tax return to get the amount they’re owed. The majority of them are extremely low-income Latinx families for whom filing a tax return, particularly if they are not proficient in English, will be especially onerous.
Burdick, who has worked with this population closely, said many of these families have little language or Internet proficiency, and may be lacking the documentation they need to fill out a tax return.
“There are a lot of people who have been unable to access these absolutely essential credits just because of other procedural irregularities,” Burdick said.
But tax preparers say there could be mass confusion among all filers.
There are still many families who should have received the child tax credit but never did, and it remains unclear why. There are others who are tied up in dispute with their child’s other parent or guardian who may have mistakenly received the credit instead. Those issues are being resolved in tandem with the start of tax filing season.
The IRS does not plan to move the filing deadline, which is April 18 this year, but the Treasury Department did say it anticipated a “frustrating season” for filers. The IRS’s shrinking workforce — it has been reduced by 17 percent since 2010 — caused by consistent budget cuts means there will be fewer people available at physical sites or to answer the phones. Last year, IRS customer representatives were only able to answer 11 percent of calls to the agency, down from 24 percent in 2020 and 29 percent in 2019, according to an annual report to Congress by the National Taxpayer Advocate, an IRS watchdog group.
“It’s going to be a huge mess,” Burdick said.
Here are some of the most commonly asked questions regarding the child tax credit this filing season. The responses are based on the IRS’s child tax credit fact sheet ahead of tax filing season.
How was the child tax credit changed in 2021?
Three key changes were made as a result of the coronavirus legislation, the American Rescue Plan, passed in early 2021:
- The child tax credit became fully available to the lowest-income families, including those who earn $0 and don’t typically file tax returns.
- The amount increased from a maximum of $2,000 per child to $3,000 or $3,600 per child, depending on the child’s age.
- Half of the payments were disbursed monthly in increments of $300 for kids 5 and under and $250 each for kids 6 to 17 from July 15 to mid-December. Regardless of whether they received those payments or not, families with children will have to claim the remaining amount they are due in their 2021 tax filing. For those who received all six monthly payments, that could be $1,800 if a family has a young child, or $3,300 if a family has a young child and an older child, for example.
Who qualifies for the child tax credit?
Nearly every child under the age of 18 before January 1, 2022 qualifies for the child tax credit, an estimated 65 million people, and about 61 million received the monthly payments.
Parents or caregivers can claim a child as long as:
- The child has lived with them for at least six months during 2021 (though there are some exceptions, including for kids with divorced or separated parents).
- They have lived six months or more in the United States.
- Stepchildren, foster children, half siblings and descendants, including grandchildren and nieces or nephews, may also qualify if the tax filer is their main caretaker.
- The child may be a U.S. citizen, U.S. national or U.S. resident alien.
The money is available on a sliding scale, with families earning more money receiving smaller portions of the credit. The credit begins to decrease for individuals who earn $75,000 a year, single parents or heads of households who earn $112,500 a year and couples who earn $150,000 a year or more. Those who earn beyond these thresholds will see the benefit begin to decrease gradually until it hits $2,000 per child.
Then, those who are earning $400,000 as a married couple or $200,000 as a single filer or head of household will see their benefit reduced to under $2,000 per child until it phases out completely for the highest earners.
If I am undocumented, do I qualify for the money?
However, to sign up to receive the funds, undocumented parents or guardians must have Social Security numbers or an Individual Taxpayer Identification Number, known as an ITIN. You can file a form W-7 Application for IRS Individual Taxpayer Identification Number to receive an ITIN.
Families where one person was an undocumented immigrant did not receive the first monthly child tax credit payment last year. Most were able to get this payment later in 2021, but many families still reported only receiving partial payments or none at all.
Do I need to claim the child tax credit in my taxes this year?
Yes. The money that was sent to families monthly in late 2021 was only 50 percent of the total child tax credit to which they are entitled. The second half of the credit always meant to come as a lump sum after families filed their taxes. That means that all families will have to claim what they are still due, whether it’s 50 percent of the total or more.
How do I know what I need to input in my tax filing about the child tax credit?
The IRS will send a letter to households that received the child tax credit in January that will include the amount they have received in tax credit payments in 2021 according to the IRS’s records. That is the amount that will have to be included in the tax filing to help ensure you receive the remaining credit.
What letter do I have to look for from the IRS and how will I recognize it?
The letter is called a Letter 6419 (this label will be located on the bottom right-hand corner of the page).
At the top of the letter, it will contain information inside Box 1 on the “aggregate amount of AdvCTC payments you received for 2021,” which is the total amount of money you got last year in monthly child tax credit payments.
That number is what you will have to input on a Schedule 8812 (the tax form to apply for credits for qualifying children and dependents) on lines 14f or 15e, depending which applies for you. Those filing a joint return will have to add up the amounts listed in Box 1 of the Letter 6419 they each received in their Schedule 8812.
A second box on the letter will include the number of children who you are claiming for the child tax credit.
If I don’t typically file taxes, do I need to file this year to get the child tax credit?
Yes. Even if you earned no income in 2021, you are entitled to the full child tax credit. But, in order to get the full credit or the portion remaining, you will need to file a tax return, regardless of whether you received the monthly payments or not.
The funds will come through direct deposit at the bank account you have on file with the IRS, or through the mail in a paper check.
How can I get the child tax credit if I don’t have a bank account?
One option is to open a low-cost or no-cost bank account. Many banks insured by the Federal Deposit Insurance Corporation (FDIC) offer those. Here is a directory of those banks.
According to the IRS, BankOn, American Bankers Association, Independent Community Bankers of America and the National Credit Union Administration have lists of banks and credit unions that are able to open an account online.
What if I had a newborn in 2021?
The IRS was initially supposed to provide parents an option to claim their newborns through a portal the agency set up late last year, but no such option became available. Those parents will have to claim the full tax credit they are entitled to — up to $3,600 — when they claim their child in their 2021 tax filing.
There was a problem with my monthly child tax credit and I never received them or only received partial payments. What do I do?
Those who faced roadblocks accessing the monthly payments should claim the remaining amount they are entitled to in their 2021 tax filing. For some, it could be the full credit, and for others it would be the full credit minus whatever payment they did receive between July and December 2021.
I share custody of a child. How does the IRS determine who claims them for the child tax credit?
The IRS will base which parent gets the child tax credit on which parent claimed the child in their most recent tax filing, either 2019 or 2020.
My child’s other parent got monthly child tax credit payments even though I’ll be claiming the child in my 2021 tax filing. Can I still claim the full child tax credit?
Yes. The other parent should have unenrolled from the monthly payments using a portal tool the IRS provided during late 2021. Regardless, that will not affect your ability to claim the entire credit for your child.
Tax preparers suggest parents who share custody file their tax return as quickly as possible. The IRS will reach out to both parties and request proof of who should claim the child.
What do I do if I received some child tax credit payment for my child because they were living with me in early 2021, but that child no longer lives with me?
You qualify for the child tax credit for your child if they lived with you for six months or more during 2021.
If that status changed later in the year and the six-month threshold was ultimately not met, you may have to repay the IRS for the months you received the child tax credit. Prior to late November, families could also update this information in the IRS portal.
If my income status or family status changed, will I have to repay all or part of my monthly child tax credits back to the IRS?
There are several reasons why you may have to repay monthly credits:
- Your income changed dramatically at the end of 2021.
- The child you claimed ultimately lived with you for less than six months last year
- You moved and were not residing in the United States for the required six months in 2021.
Those who fall into this category will have to report the excess amount as additional income tax, which could reduce your ultimate tax refund or increase what you owe to the IRS for 2021.
However, many people will qualify for at least a portion of repayment protection.
Who qualifies for repayment protection?
To qualify for the full repayment protection, meaning you don’t have to pay back any excess child tax credit funds, your income needs to be at or below $40,000 for a single person, $50,000 for a head of household and $60,000 for a married couple.
How much repayment protection you have is then reduced until families hit $80,000 in income for a single person, $100,000 for a head of household or $120,000 for a married couple. Those above this threshold will have to repay the IRS in full.
If the IRS used my 2019 tax filing to determine my child tax credit payment, but I filed my 2020 return in 2021 with different income, will the amount I receive change?
It could. The IRS recalculates your child tax credit payment after it receives your most updated tax filing.
Could claiming the child tax credit delay my tax return in any way?
Only if you incorrectly input the amount that you have claimed so far, in which case, the processing of your filing may be delayed. It is critical to input the exact amount that you have received so far for the child tax credit so your return can be processed properly.
Will the child tax credit affect what other government benefits I qualify for?
No. The child tax credit does not count as income, and therefore does not change your qualification for other benefits, including food stamps, Section 8 housing, Social Security benefits, or any other federal, state or local government assistance benefit.
Do I still qualify for the child tax credit if my child died in 2021?
Yes, as long as your child lived with you for more than half the time they were alive in 2021, you are eligible to claim them.
If I am a resident of Puerto Rico, can I claim the child tax credit?
Residents of Puerto Rico were not eligible for the monthly payments but could receive the full payment with their 2021 tax filing. To receive it, they may claim a child on their Form 1040-PR, Form 1040-SS or other 1040 series form filed with the IRS for 2021.
What if I’m a resident of American Samoa, the Commonwealth of the Northern Mariana Islands, Guam or the U.S. Virgin Islands?
You may be eligible to claim the child tax credit with your U.S. territory tax agency. Contact your local U.S. territory tax agency for more information.
Where can I get help completing my tax filing for free?
The IRS has the Volunteer Income Tax Assistance program, with VITA sites across the country where you can get free tax preparation services. VITA sites are particularly helpful if you are trying to get the child tax credit because tax preparers have been trained in detail to handle the changes in the tax filings process as a result of new coronavirus policies.
VITA help is available for people who make $58,000 or less, people with disabilities or those who have limited English-speaking proficiency. Here’s where to find a VITA site near you.
Additionally, the IRS also manages a directory of tax preparers who hold credentials from the IRS or who have passed an annual filing season program. Some of these services are provided for free.