Was your child tax credit payment less than expected in December? Here’s what to know
Some parents may have received a child tax credit payment that was smaller than expected in December.
The sixth and possibly final round of direct payments went out to eligible families on Wednesday, Dec. 15, either via direct deposit or through paper checks sent in the mail. But because of a technical issue that resulted in some families being overpaid earlier this year, some may have received less than what they were sent in previous months.
In September, less than 2% of eligible families received their child tax credit payments later than usual because of a technical issue, according to the Internal Revenue Service.
The issue mostly affected parents who had recently made changes to their bank account or address information with the IRS, the agency said. Specifically, it largely affected “payments to married taxpayers filing jointly where only one spouse made a bank account or address change, which usually results in payments being split into two.”
“In some of these cases, the split payment caused a delay in making payments, and further caused individuals to receive slightly more than the correct payment in September,” the IRS said.
Now, the IRS said it is making up for the overpayments by sending each spouse “slightly” reduced payments in October, November and December. Parents who were impacted should have received letters from the agency.
“For each taxpayer receiving a payment, the typical overpayment was $31.25 per child between 6 and 17 years old and $37.50 per child under 6 years old,” the IRS said in October. “This will result in about a $10 to $13 reduction per child in the three remaining monthly payments.”
The temporarily enhanced tax credits were included in the $1.9 trillion American Rescue Plan signed into law by President Joe Biden in March. They provide eligible families with $3,600 total per child under age 6 and $3,000 total per child ages 6 to 17 over the course of a year.
The first half of the credit has been sent as monthly payments of up to $300 per child under age 6 and up to $250 per child ages 6 to 17. The second half can be claimed when parents file their 2021 federal income tax returns in 2022.
Single parents earning up to $75,000 a year and couples earning up to $150,000 a year are eligible for the full credit. Benefits are then phased out for higher incomes.
The enhanced credits are an increase from the $2,000 per child tax credit in 2020. This year also marks the first time that part of the child tax credit has been sent as direct payments to parents. But the expansion is set to end after 2021 unless Congress acts to extend it.
Democratic lawmakers have proposed extending the monthly child tax credit payments for another year under the Build Back Better plan, a $1.9 trillion spending package. Under the bill’s current form, only joint filers earning less than $150,000 and heads of households making less than $112,500 would get the direct payments, CNN reported.
The bill passed the House in November but now faces obstacles in the Senate, where it will likely undergo changes before it potentially passes. The IRS has told lawmakers that they would need to pass the bill by Dec. 28 for direct payments to be issued by mid-January, CBS News reported.
This story was originally published December 15, 2021 at 9:28 AM with the headline "Was your child tax credit payment less than expected in December? Here’s what to know."
