(CBS Baltimore) — The fifth Child Tax Credit payment from the Internal Revenue Service (IRS) will be sent out next Monday. But many parents want to know when exactly the money will be deposited into their bank account. Last month’s checks came in the morning of October 15 for those with direct deposit, or shortly after for those who received it in the mail. This month’s payment will be made on Monday, November 15. Advance payments will continue next month, thanks to the US bailout plan passed in March 2021. While a new incentive scheme seems unlikely at this point, Democratic lawmakers want to extend the advance on Child Benefit through 2025.
Families can use the Child Tax Credit as they wish. That means the extra $250 or $300 per child can be spent on essentials like food or rent. It could also be spent on school supplies or a new computer, should COVID students resume distance learning. Other households can use the money for piano lessons, childcare, or even diapers. Either way, the money comes at a time when much of the other pandemic aid — most recently the extra unemployment insurance — has ended. Knowing that additional revenue is coming provides a degree of security and flexibility in a world full of surprises.
How much should your check be?
READ MORE: Fourth Stimulation Check: is another allowance possible?
The IRS pays a total of $3,600 per child to parents of children up to the age of five. That drops to $3,000 for every child ages six to 17. Half of the total will be paid as six-month payments and half as a 2021 tax credit. So every month through December, parents of a younger child will receive $300 and parents of an older child will receive $250. The IRS also has a one-time payment made from $500 for dependents age 18 or full-time students up to age 24.
A reminder to American families this fall: #IRS spends millions in advances every month #Child tax credit payments through December 2021. If you have any questions, check out the answers we posted online at: https://t.co/Om9jyBsGP3 pic.twitter.com/5fA1g8S54n
— IRSnews (@IRSnews) Nov 9, 2021
The updated child tax credit is based on parents’ modified adjusted gross income (AGI) as reflected in their 2020 tax returns (AGI is the sum of a person’s wages, interest, dividends, alimony, retirement benefits, and other sources of income minus certain deductions, such as student loan interest, alimony payments, and retirement contributions.) The amount is phased out at a rate of $50 for every $1,000 in annual income over $75,000 for an individual and over $150,000 for a married couple. The benefit is fully refundable, meaning it is not dependent on the recipient’s current tax burden. Eligible families receive the full amount regardless of what they owe in taxes. There is no limit to the number of dependents that can be claimed.
For example, suppose a married couple has a three-year-old child and a seven-year-old child and shows an annual combined income of $120,000 on their taxes in 2020. The IRS sends them $550 a month. That’s $300 a month ($3,600/12) for the younger child and $250 a month ($3,000/12) for the older child. Those payments will last through December. The couple would then receive the $3,300 balance — $1,800 ($300 X 6) for the younger child and $1,500 ($250 X 6) for the older child — as part of their 2021 tax refund.
Parents of a child who matures outside an age category will be paid the lowest amount. That means if a five-year-old turns six in 2021, the parents will receive a total credit of $3,000 for the year, not $3,600. Likewise, if a 17-year-old turns 18 in 2021, the parents will receive $500, not $3,000.
Some people got a little more than the right one #Child tax credit payment in Sept. To adjust for this, the following #IRS payments are slightly reduced. More information at: https://t.co/H05t6S0flj
*Thanks for sharing your art with us, Alex!* pic.twitter.com/rWn2pQtpjK
— IRSnews (@IRSnews) Nov 7, 2021
An income increase in 2021 to an amount above the $75,000 ($150,000) threshold could lower a household’s child tax credit. The IRS has confirmed that they will soon allow claimants to adjust their income and holding information online, reducing their payments. Failure to do so may increase your tax bill or reduce the tax refund once the 2021 tax is filed.
To be eligible, the dependent must be part of the household for at least half of the year and be supported by the taxpayer for at least half. A taxpayer earning more than $95,000 ($170,000) — with the credit disappearing completely — is not eligible for the extended credit. But they can still claim the existing $2,000 per child credit.
How do you make changes for future payments?
The IRS has three different tools to help recipients and potential recipients update, record, and verify their eligibility information on file.
Child Tax Credit Update Portal
READ MORE: Supply chain issues: ‘There really are problems everywhere’, even for small businesses
The Child Tax Credit Update Portal allows users to make sure they are registered to receive advances. It also allows recipients to opt out of prepayments in favor of a one-time credit when filing their 2021 taxes. The deadline for the next payment was November 1. The last opt-out deadline for the last future payment of the current version of the Child Tax Credit Advance is November 29.
The tool also allows users to add or change direct deposit bank account information, view their payment history, update their mailing address, and change their adjusted gross income. Soon, users will also be able to customize dependent information.
To access this portal, users need an IRS username or an ID.me account. ID.me is a sign-in service used by various government agencies, including the IRS, the Social Security Administration, and the Department of the Treasury, to authenticate users. Users need a valid photo ID to create an account.
Child Tax Credit Application Tool
The Child Tax Credit Non-Fileer Application Tool is designed to help parents of children born before 2021 who typically do not file tax returns, but are eligible for child tax credit advances. That means parents who haven’t filed their taxes for 2020 don’t have to file and don’t plan to file returns. (Parents who have declared their family members on their 2019 tax return are not allowed to use this tool.)
Users enter their personal information, including their name, mailing address, email address, date of birth, relevant social security numbers, bank account information and PIN for identity protection. The IRS uses the information to verify eligibility and, once confirmed, begins making payments. The IRS and experts recommend using the tool on a desktop or laptop computer rather than a mobile device.
Child Tax Credit Eligibility Assistant
The Child Tax Credit Eligibility Assistant allows parents to check their eligibility for Child Tax Credit prepayments. Users need a copy of their 2020 tax return or, subject to their 2019 tax return. It is also fine to estimate income and expenses for the correct tax year, although the result may not be accurate. The assistant asks multiple questions to determine eligibility, but does not ask for sensitive information. No bookings are registered.
MORE NEWS: Supply Chain Problems: How Global Shortages Are Affecting Consumers Across the Country
Originally published on Friday, August 6 at 5:01 PM ET.