Approximately $15 billion were sent to 60 million families who qualified for the increased Child Tax Credit program. Unfortunately, some received the wrong amount, with a sum more or less than the estimated $300 monthly payments. Here are four reasons why this could happen and a few tips on how to fix the situation.
The Biden Administration made the program to help families who struggle in their child care expenses. As part of the $1.9 trillion coronavirus relief package, the government sent out an annual payment of $3,600 for children under age 6, $3,000 for children 6-17, and a one-time payment to other similar dependents. Families receive these corresponding amounts based on their eligibility.
If the numbers differ from the proposed budget, Money listed a few reasons for what might have happened.
4. Number of Dependents Have Changed on 2021
Events like custody agreements, new birth, adoptions, birthday, and death affect the number of dependents listed under your name. Note, however, that these changes are only factored in "late summer," sometime in September. Therefore, IRS paid you the child tax credit money based on your previous tax information.
For example, you calculated receiving money for a recently adopted baby in April. IRS will not pay you the corresponding $300 monthly payment until after the child was properly listed under the tax returns form. Fortunately, the previously missed payments would be paid back through 2022 tax returns.
3. Changes in 2020 Income
Similar to the circumstance with dependents, sudden changes in your adjusted gross income (AGI) would not be factored in the payment until September. People who should look out for this are parents whose income dramatically increased or decreased between 2020 to 2021
For single filers who earned less than $75,000, you are eligible for child tax credit money. Wait out until September to update your status and get the money.
For single filers who earn $240,000 and higher, you are not eligible for the child tax credit money. It would be better to unenroll from the monthly payments now instead of owing the IRS some money in tax season.
2. Child Ages Out of Eligibility
Note that children also have eligibility requirements for the child tax credit money. Children who are scheduled to outgrow their age bracket (turning from 5 to 6 or turning from 17 to 18) at any point in 2021 automatically get the money from the new age bracket. So don't get too surprised to receive less money than you expected.
1. Money Was Garnished by Debt Collectors
Unfortunately, IRS could use your child tax credit money to pay for overdue taxes, child support, and other federal debts. The money could also be garnished by local and private debt collectors, bank loans, and other similar expenses.
To check on these debts, head to your local government or private bank. These two could provide you a list of pre-existing fines and payments.
What to Do Next If You Received the Wronf Child Tax Credit Amount
If you need assistance, Wavy recommended calling IRS customer service on 800-829-1040. The phone line is open 7 AM to 7 PM local time.
IRS might also have delay issues with their payment. It is recommended to wait five days from the deposit date and four weeks from the payment date before filing a complaint.
Lastly, keep your information on the IRS Child Tax Credit portal updated. IRS often uses this database to update the status of your ongoing child tax credit payment. You could also update your information like the number of dependents, new income status, and updated bank account on this website.
Related Article: Online Petition for $2000 Fourth Stimulus Check: When Will It Hit 3 Million Signatures?