Why was your child tax credit lower this month?



Some parents may have received a lower than expected child tax credit payment in December.

The sixth and possibly the last round of direct payments was made to eligible families on Wednesday, December 15, either by direct deposit or by mailed paper checks. But due to a technical glitch that caused some families to overpay earlier this year, some may have received less than they received in previous months.

In September, less than 2% of eligible families received their child tax credit payments later than usual due to a technical glitch, according to the Internal Revenue Service.

The problem mainly affected parents who had recently changed their bank account or address information with the IRS, the agency said. Specifically, this largely affected “payments to married taxpayers jointly reporting when only one of the spouses made a change of bank account or address, which usually results in the payments being split into two.”

“In some of these cases, the split payment resulted in late payments and further resulted in individuals receiving little more than the correct payment in September,” the IRS said.

Now the IRS has said it compensates for overpayments by sending each spouse “slightly” reduced payments in October, November and December. Parents who were affected should have received letters from the agency.

“For each taxpayer receiving a payment, the typical overpayment was $ 31.25 per child between the ages of 6 and 17 and $ 37.50 per child under the age of 6,” the IRS said in October. “This will translate to a reduction of about $ 10 to $ 13 per child on the remaining three monthly payments. “

The temporarily improved tax credits were included in the $ 1.9 trillion US bailout package enacted by President Joe Biden in March. They provide eligible families with $ 3,600 in total per child under 6 and $ 3,000 in total per child 6 to 17 over the course of a year.

The first half of the credit was sent in monthly payments of up to $ 300 per child under 6 and up to $ 250 per child 6 to 17. The second half can be claimed when parents file their 2021 federal income tax return in 2022.

Single parents earning up to $ 75,000 per year and couples earning up to $ 150,000 per year are eligible for the full credit. Benefits are then phased out for higher incomes.

The enhanced credits represent an increase over the tax credit of $ 2,000 per child in 2020. This year also marks the first time that a portion of the child tax credit has been sent as direct payments to parents. But the expansion is expected to end after 2021, unless Congress acts to extend it.

Democratic lawmakers have proposed extending monthly child tax credit payments by one year as part of the Build Back Better plan, a $ 1.9 trillion spending program. In the bill’s current form, only joint filers earning less than $ 150,000 and heads of households earning less than $ 112,500 would get the direct payments, CNN reported.

The bill was passed by the House in November, but now faces hurdles in the Senate, where it will likely undergo changes before potentially being passed. The IRS has told lawmakers they should pass the bill by December 28 for direct payments to be issued by mid-January, CBS News reported.

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Bailey Aldridge is a reporter who covers real-time news in North and South Carolina. She graduated in journalism from the University of North Carolina at Chapel Hill.

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