Deadline for child tax credit cash looms as monthly $250 check may be coming

Monthly stimulus checks proposed for families

Utah senator Mitt Romney has put forward the Family Security Act that would be similar to the Child Tax Credit.

Eligible families with children up to five years old would receive $350 a month, and $250 for children six to 17-years old.

By comparison, the Child Tax Credit gave families $300 a month for children under six, and $250 for children between six and 17.

The bill has yet to be formally proposed but could end up being bipartisan, with it being negotiated by both sides of Congress.

IRS warns about tax returns being rejected

IRS has issued a new warning about tax returns possibly being rejected.

Electronic returns missing one form will be automatically rejected for certain taxpayers, the agency said in a news release on Tuesday, March 22.

For those who need to reconcile advance payments of the Premium Tax Credit, Form 8962 must be filed with your return.

The Premium Tax Credit, or PTC, helps individuals and families pay for their health insurance premiums, and the form does not involve the child tax credit payments that are also a part of taxes for many Americans.

‘Change of circumstances’ portal

If your family dynamic changed – say you sent off a kid to college, were expecting a baby, tying the knot or your annual income changed in 2021 – all of these factors might affect whether you qualified or how much money you could be sent last year in child tax credit payments.

The “change of circumstances portal should allow them to enter their change in marital status and also where the children are,” Nina Olson, executive director of the Center for Taxpayer Rights said during a previous IRS oversight hearing.

Americans are worried about their returns

According to a recent Bankrate study, Americans are concerned about their tax returns this year, per CBS News.

Almost one-fourth of people are afraid that their return will be late, and nearly one-third are concerned that their refund would be lower than usual.

You could owe child tax credit money

While the child tax credit payments have helped millions of children and families escape poverty, some may be required to reimburse the IRS if their filing status changes or their wages increase.

Couples must earn less than $150,000, and single parents filing as heads of households must earn less than $112,500 to be eligible for the full payments.

If your income exceeds such limits, you may be required to refund the IRS if you neglected to opt-out of payments.

‘Many thousands of dollars on the line’

“We’re talking of many thousands of dollars on the line here for low-income families,” Abby Shafroth, an attorney and director of the student loan borrower assistance project at the National Consumer Law Center, told CNBC.

“All those benefits [of the pandemic-relief law] will be lost for families suffering from unaffordable student loans.”

Parents with student loans may lose money

Some parents who’ve defaulted on their federal student loans might have part of their child tax credit seized this tax season, according to CNBC.

There are about 9million borrowers in default, the outlet noted. Half of those are parents with dependent children, which is the population that is eligible for the child tax credit, according to a 2019 report issued by the Institute for College Access and Success.

Although monthly installments of the credit paid from July through December of 2021 were protected from garnishment for federal debts, that isn’t the case for the rest of the credit that is paid as a tax refund.

However, refunds that are received before May 1 are protected thanks to the federal student loan pause, CNBC reported.

Manchin says he’s been ‘clear’ about position

“Sen. Joe Manchin tells me that he’s been ‘very clear’ about his position and he still wants a work requirement for the child tax credit,” Business Insider reporter Joseph Zeballos-Roig shared on Twitter.

“Manchin just now: ‘I think there should be a work requirement. That means you file a 1099.. I’ve been very, I think very direct.’ This is a position he’s held since September,” Zeballos-Roig added in another tweet.

Manchin doubles down

Sen Joe Manchin has doubled down on not supporting an extension of the advance child tax credits under President Joe Biden’s Build Back Better legislation.

The West Virginia politician said recently that he will not support an extension of the enhanced child tax credit without the addition of a work requirement for parents, CNBC reported.

Strong words for Sen Manchin

Lansdowne lives in West Virginia and had strong words for her Senator, Joe Manchin, over the end of the enhanced child tax credits.

“Go speak to the working class and see how they feel,” she said.

“I will tell you, it helped a lot. And now I’m in a predicament where I can’t work because there is no child tax credit to help me with day care.”

‘You’ve got to get creative’

Joi Lansdowne started toilet training her daughter Kaleasi, who recently turned 2, after the enhanced monthly child tax credits ended, and spoke to CNN about what the conclusion of the payments meant for their family.

The mom of two said she could save money on diapers, which run her about $100 every 10 days or so, at a time when money is tighter.

“That is a huge expense,” said Lansdowne, 26, who said she’d hoped she’d keep receiving the $300 monthly payments this year.

“When you don’t have the funds to cover those things, you’ve got to get creative.”

Do parents feel that the current CTC is enough?

According to the Cost of Care Survey, 25percent of parents said that the current plan provides enough support.

56percent said the plan should go further in helping provide child care support for families.

79percent of respondents said they support the increase in child tax credit payments.

Sacrifices made to afford child care

According to Care.com, 94 percent of parents have had to make at least one major sacrifice in the last year:

• 42 percent of parents reduced their hours at work
• 26 percent of parents changed jobs
• 26 percent of parents left the workforce entirely

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 US 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.

Permanent CTC expansion recommended by experts

A group of economists previously argued that Child Tax Credits worth up to $3,6000 should be made permanent.

In a letter signed by 448 experts to Congressional leaders, they said a permanent boost to the 2021 child tax credits would “dramatically reduce childhood poverty.”It cited a study released by the National Academy of Sciences that found that a permanent program would cost 16 cents for every $1 in new economic benefits.

Could CTC checks return with double payment?

White House press secretary Jen Psaki previously said that if Congress could agree on an extension to the expanded Child Tax Credit that expired at the end of 2021, double payments could be a possibility in the future.

She said: “If we get it done in January, we’ve talked to Treasury officials and others about doing double payments in February as an option.”

But a bill passage doesn’t appear to be close, based on where things stand currently, and no double payments went out in January or February.

The resumption of the child tax credit payments would likely have to be included as a provision in President Biden’s Build Back Better agenda.

2021 and 2022 tax credit difference, continued

The credit was also distributed in monthly advance cash payments commencing in July 2021.

The credit for 2020 was only partially refundable; however, the credit for 2021 is totally refundable.

The credit for 2021 is geared primarily at low- and middle-income earners.

2021 and 2022 tax credit difference

Although there are some similarities, the child tax credit in 2021 differs dramatically from the allowance in 2020.

The credit will increase from $2,000 for children under the age of 17 in 2020 to $3,600 for children under the age of 6 and $3,000 for children aged 6 to 17 in 2021.

Indiana man stole CTC money

A local news outlet reported that a man from Mitchell, Indiana, allegedly stole more than $600 of a woman’s child tax credit money in November 2021.

The incident was captured on video surveillance, and the man, identified as 33-year-old Michael Jarvis, was arrested on theft charges.

Impact of losing CTC payments, continued

Mike Stevens, the founder of Capital Wealth Managers in Lehi, Utah, encouraged families losing the monthly payments to plan carefully.

In an interview with KUTV, Stevens said: “Everyone that is impacted can just budget accordingly to say, hey, if you were counting on this money, it’s not coming in, here’s what we need to adjust to make sure that we’re going to be okay and still meet our obligations.”

Impact of losing CTC payments

Local Utah outlet KUTV spoke with experts and a parent about the impact of losing advance child tax credit payments.

Alexandria Taylor, a single mother with three kids, said the $750 monthly payment made a big difference for her family that is used to tight circumstances.

“For a single mother, that’s what I’m used to, and it was nice to have that extra help,” Taylor said.

She said the money went to necessities including utility bills, gas, and food.

Child tax credit, continued

For every family earning $125,000 or less, the child tax credit covered 50 percent of qualifying expenses up to $8,000 associated with the care of a child under 13 or a spouse, parent or other dependent who is unable to care for themselves.

If a family is caring for two or more eligible dependents, they can collect up to $16,000 in expenses.

For families earning between $125,000 and $183,000, it will cover up to 20 percent, according to iHeart.

Child tax credit, explained

The Internal Revenue Service defines the CTC as “a credit allowed for a percentage of work-related expenses that a taxpayer incurs for the care of qualifying persons to enable the taxpayer to work or look for work.”

From July to December 2021, the IRS started doling out money to eligible families with the child tax credit worth as much as $300 per month for each child under 6 years old and $250 for each kid between the ages of 6 and 17.

To claim, IRS encourages online services

On the IRS website, individuals can use their online account to securely access the most up-to-date information about their federal tax account, including information on their CTC, and to view information from their most recently filed tax return.

From there, according to IRS, users can:

• View the amounts of the Economic Impact Payments received
• Access Child Tax Credit Update portal
• View data from most recent tax returns and access additional records
• View 5 years of payment history and any pending or scheduled payments