With six advance monthly child tax credit checks sent out last year, only one payment is left. This final installment, which arrives with your tax refund after you file your 2021 tax return, includes any money you didn’t receive last year, plus the second half of the total payment you’re eligible for. But the big question still remains: Will the enhanced child tax credit payment program be extended, even if for just another year?
While no decision has been made yet, it all depends on the outcome of the Build Back Better bill. If the vote is no, the child tax credit will revert back to its original amount. Sen. Joe Manchin, a West Virginia Democrat, said he wouldn’t support the bill unless a work requirement for parents is added.
We’ll explain what’s happening with the child tax credit this year. Also, it’s a good idea for families to update their banking details, income and mailing address through the IRS Update Portal ahead of tax season. And here’s what to know if you received the wrong payment amount .
Will the enhanced child tax credit be extended?
Given the popularity of the program with millions of families, there’s still a chance the credit could be extended. A recent study published by the Urban Institute shows that if the child tax credit is extended beyond 2021, it could substantially reduce child poverty in the vast majority of US states. Most recently, lawmakers proposed extending the child tax credit to just one year, in an effort to trim the cost of President Joe Biden’s $3.5 trillion plan. But others are still pushing for the credit to be extended to 2025.
For instance, House Democrats came up with a proposal to keep the increased benefit going until 2025, which would also allow low-income families who don’t earn enough to owe taxes to get the benefit. However, Manchin has a different expectation, saying he’d prefer that parents be eligible to receive the credit only if they work and file taxes. His vote is critical for the bill to pass the Senate.
In a December letter to senators, Senate Majority Leader Chuck Schumer promised a vote on Build Back Better in early January. However, the focus has now shifted away from the bill and onto elections legislation. Press Secretary Jen Psaki said during a press briefing Jan. 4 that they’re working with Schumer on getting voting rights done. “But that doesn’t change our commitment to Build Back Better,” she said.
A Washington-based think tank called the Bipartisan Policy Center put out a proposal for permanently expanding the child tax credit. On Sept. 15, more than 400 leading economists sent an open letter urging Congress to make the enhanced credit permanent. The letter noted that the benefit would help families with immediate necessities, like food and utilities, and could drastically improve children’s health and education.
What about the remaining child tax credit payments?
The IRS has finished sending advance partial payments to those who qualify . The remainder of your money will come with your tax refund this year after you file your 2021 tax return. While the IRS did extend https://installmentloansgroup.com/payday-loans-la/ the 2020 and 2021 tax filing dates due to the pandemic, you typically have from the end of January to April 15 to file.
Can families determine how the credit will affect tax season?
To help you file your taxes this year and either claim whatever amount the IRS still owes you or repay money you received but didn’t qualify for, the IRS is sending a letter in ount of child tax credit money you received in 2021. You’ll use information from this letter, which the IRS is calling Letter 6419, when you file your tax return.
For more, here’s everything you need to know about the 2021 child tax credit and what to do if you need to track down a missing payment.