We have been asked by many of our clients: “What do I do, if I haven’t received the first installment of money for kids on July 15?”
We are going to explain, but first, let’s understand what money we are talking about here.
Child Tax Credit (CTC) explanation.
Due to COVID-19, the government has taken many measures to stimulate our economy. For that reason, many Americans received three stimulus payments, however, the Congress decided that it wasn’t enough and wanted to provide additional help to people with kids. They did so by increasing the Child Tax Credit (CTC).
Rest assured, Child Tax Credit isn’t new, you have gotten money for kids every year when you filed your tax return. Just in case, allow me to explain how it works. Let’s assume that after calculating your tax liability, you owe $5000. You have two sons, ages 5 and 7, which means that for each child the government will forgive you $2000 or $4000 in your case because you have two kids. From your liability of $5000, we will deduct $4000 and now you only have to pay $1000 in taxes.
What happens if you didn’t owe any tax after all of the calculations? Instead of a break of $2000 in your tax liability, you would instead get extra money added to your refund, but no more than $1400 per child. Of course, I oversimplified the example. In reality, things are much more complex, various things, like your total income earned, total taxes paid, even the immigration status of your kids will have an effect on Child Tax Credit.
Due to the pandemic, our government decided to make temporary changes to how you receive this money for kids. Instead of waiting for you to file your tax return, to receive Child Tax Credit, you will be getting payments every month for six months, and the remainder will be given at tax. The good news, the Congress made a decision to increase these payments for kids from $2000 to $3600 per child under the age of five or $3000 for kids from five to 18 (prior to the changes, Child Tax Credit stopped at 17).
Advance payments will be issued on the following days:
- July 15
- August 13
- September 15
- October 15
- November 15
- December 15
You will be getting $250 or $300 each month, depending on the age of your child.
I haven’t received my first installment on July 15.
Unfortunately, we heard from many clients that they didn’t receive their first installment on July 15.
We would like to remind you that not everyone will be getting payments by direct deposit. If you changed your bank and didn’t update the info in the IRS system, you will be getting a check or a card. Also, if you have a tax liability and had to pay taxes, instead of receiving a refund, and didn’t update your banking info in the IRS portal, you will be getting a check or a card.
However, some of our clients report that none of those conditions apply to them. The IRS wants you to check your eligibility on their site first, to do that, you will have to log in to their portal. If you are eligible but haven’t received any money, you can file form 3911 to request a trace of your funds.
The IRS has launched a frequently asked questions page to address delays, eligibility, and other common questions related to the CTC checks.
Hope this article was useful for you and if you have any questions please contact our team. We have more than 20 years of experience in tax consulting and accounting so we’re here to help you!