EXTRA child tax credit payments worth $175 per child are on the way.
In New Mexico on Monday, February 14, 2022, legislators passed a bill that provides $380million in tax relief.
The bill includes a new child tax credit for up to $175 per child. The tax credit depends on income level, though it is not clear who will qualify.
It comes as parents could be eligible for up to $8,000 child tax credit to help them with the costs of raising a family.
Apart from child tax credit payments struggling families could also qualify for the Child and Dependent Care Credit.
The child and dependent credit allows parents to claim up to 50 per cent of their childcare expenses which would b up to $16,000 for two or more children.
This means families who spent at least $16,000 can get half back from the IRS upon filing a 2021 tax return.
Read our child tax credit live blog for the latest news and updates...
CTC payments ‘strongly reduced food insufficiency’
The National Bureau of Economic Research released a paper on the impacts of the child tax credit payments and revealed startling findings.
First, the child tax credit payments “strongly reduced food insufficiency: the initial payments led to a 7.5 percentage point (25 percent) decline in food insufficiency among low-income households with children,” according to the study.
Claiming the child and dependent care tax credit
The child and dependent care tax credit was also expanded under the Rescue Act.
Families can now claim up to 50 percent of qualifying expenses, up from 35 percent previously.
Once that threshold exceeds that number, the credit percentage rate starts to phase out from 50 percent.
Specifically, families with more than one kid who spent $16,000 in qualifying expenses will be able to claim care credits of up to $8,000.
Claimants with one child can receive credits of up to $4,000.
Reconciling CTC payments
The IRS issued a few tips that taxpayers should use to correctly reconcile their Child Tax Credit payments in their 2021 tax return.
- Carefully read Letter 6419
- Assemble your records and ensure that your tax returns are filed correctly
- Get your total payment amount by checking IRS Online Account
The agency also gave special information for taxpayers who changed their bank accounts in December, as well as for couples that are Married Filing Joint.
Child Tax Credit for Pregnant Moms Act
Several Republican lawmakers are sponsoring a bill that would make pregnant women eligible for the Child Tax Credit.
Pregnant women would be eligible for a credit up to $2,000 during any stage of the pregnancy.
The expectant mothers can still receive the credit if they have a miscarriage or a stillbirth, but not if they have an abortion.
Utah Senator Mike Lee believes that this bill would reduce the number of children born into poverty, but it has failed in past years.
IRS sends inaccurate child tax credit letter, part three
The IRS said it’s unknown how many people received the inaccurate letters but said it may be a small group of taxpayers who moved or changed bank accounts in December.
CTC checks in those cases may have been undeliverable or the direct deposits bounced from the bank where the account was closed, said Ken Corbin, the IRS chief taxpayer experience officer.
“Then the letters may not reflect what the taxpayer actually received,” said Corbin.
IRS sends inaccurate child tax credit letter, part two
The IRS form – known as letter 6419 – is needed when filling out your tax return, but using inaccurate information from it could delay or impact any refund.
A tax refund is usually the biggest check a family gets each year, meaning there is a lot on the line if there is a mistake.
Refunds could end up being delayed for weeks or even months due to a processing holdup with the IRS.
Inaccurate child tax credit letter
The IRS has admitted that essential letters about child tax credit sent to parents may contain inaccurate information, in a blunder that could have severe impacts on their tax refunds.
The agency warned that the letters they had sent out could contain inaccurate information on how much the recipient had received in child tax credits last year.
College savings program
A scheme introduced in New York City to help with future education costs has made American children eligible for $100 bonds in a college savings program.
Currently, approximately 70,000 kindergarteners became the first in the US to receive the baby bonds in September 2021.
Thus, children in that age bracket across the whole city will get a 529 college savings account.
The fund will be set up with a minimum of $100, NBC reported at the time.
Recovering missing payments, continued
Once it’s confirmed that a payment is missing, taxpayers will be able to claim the missed advance, as well as the second half of the credit, when they submit their taxes this year.
Parents will reconcile the missing advance payment in their taxes by filling out a “Form 8812” with the IRS.
How to recover missing payments
Families will have the chance to recover missed child tax credit payments from 2021 when they file taxes this year.
The IRS is sending out a letter to CTC recipients with the exact amount each family received through the expanded Child Tax Credit.
The IRS was delayed in sending out some payments. For example, many families saw September CTC payments delayed.
On the IRS Child Tax Credit portal, parents can see if the payment has been sent or processed in the Processed Payments section.
In order to check this information, users should make sure to have their IRS username and ID.me account information ready.
Tax accountants brace for confusion in 2022
Stimulus checks and child tax credits Americans received in 2021 are expected to lead to a long and confusing tax season.
Families who didn’t get all of the stimulus money and credits they were eligible for can claim them when they file their 2021 taxes.
Covid-19 and tax season 2022
The IRS is warning that a resurgence of Covid-19 infections, on top of less funding authorization from Congress than the Biden administration had requested, could make this filing season particularly challenging.
“The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don’t face processing delays,” IRS Commissioner Chuck Rettig said.
Avoiding a paper tax return will be more important than ever this year to avert processing delays, Rettig said.
The IRS said that there were prerequisites to qualify for child tax credit advance payments.
Americans, according to their website, must have:
- Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return or
- Given us your information in 2020 to receive the Economic Impact Payment with the Non-Filers: Enter Payment Info Here tool or
- Given us your information in 2021 with the Non-Filer: Submit Your Information tool and
- Lived in a main home in the United States for more than half the year (the 50 states and the District of Columbia) or filed a joint return with a spouse who has a main home in the United States for more than half the year and
- A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number and
- Made less than certain income limits
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 daycare.”
‘You’ve got to get creative’
Joi Lansdowne started toilet training her daughter Kaleasi, who recently turned two, 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.”
Family and Medical Leave Act explained, continued
According to the Department of Labor, only 56 percent of employees are eligible for the FMLA.
Even though qualified Americans are guaranteed time off, it is unpaid. This is problematic because the majority of Americans live paycheck-to-paycheck.
There’s a chance your employer might offer paid leave – but it’s not common. In fact, only 19 percent of US workers have access to paid family leave through their employers.
Family and Medical Leave Act explained
The 1993 Family and Medical Leave Act (FMLA) states that employees can take up to 12 weeks of job-protected leave each year.
However, some limitations disqualify employees for the FMLA.
‘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.
To expedite payment, use direct deposit
According to the IRS, the quickest method to collect a CTC payment is to file a tax return electronically and choose direct deposit.
The possibility of a paper check being lost, stolen, or returned to the IRS as undeliverable is eliminated with direct deposit.
It also saves money for the taxpayer; according to the IRS, each paper return costs more than $1, but each direct deposit costs only a cent.
Letter 6419 and Schedule 8812 explained
To collect the CTC, individuals need to have these documents handy:
- Letter 6419: Lists the total number of advanced payments that the recipient should have received, as well as the total monetary value, to explain how this impacts tax returns for 2021.
- Schedule 8812 (in Form 1040): Used to compute the “additional child tax credit,” which is an alternative refundable credit.
What does Letter 6419 look like?
The IRS logo is on the upper left corner of Letter 6419, which is a black-and-white one-page letter.
“2021 Total Advance Child Tax Credit (AdvCTC) Payments,” says a huge box at the top of the letter.
The following is bolded from the letter: “Keep this important tax information. You need it to prepare your 2021 income tax return.”
“Letter 6419” is not written in bold characters at the top of the correspondence. Instead, it is labeled “Letter 6419” in the lower right corner.
Do not throw away IRS Letter 6419
In recent weeks, the IRS has sent millions of letters to eligible households, who earned the Child Tax Credit in 2021 got Letter 6419.
The IRS’ Letter 6419 lists the total number of advanced payments that the recipient should have received, as well as the total monetary value, to explain how this impacts tax returns for 2021.
The number of children used to determine the compensation will also be included in the letter.
It is important to now throw it away as it can aid in filling out your taxes.
https://www.the-sun.com/money/4762691/child-tax-credit-2022-payment-stimulus-check-exact-date-update/ Child tax credit 2022 update