MILLIONS of families can now claim their advanced child tax credits by using an online portal.
The portal is available for families who did not file tax returns.
The Biden administration has initiated the newest effort to ensure low-income parents get their hands on the credits.
With the online portal, families can claim up to $3,600 per child younger than six, and up to $3,000 for each child aged six through 17.
The White House and Treasury Department launched the portal, along with the non-profit Code for America.
Read our child tax credit live blog for the very latest news and updates…
Could tax extensions delay return, part three
The late-payment penalty is normally 0.5 percent per month of the unpaid tax due by the filing date, with a maximum of 25 percent, according to CNET.
For each month or partial month that your tax return is late, the IRS can levy a late-filing penalty of 5 percent of the amount payable.
The minimum late-filing penalty is $435 or 100 percent of the unpaid tax if your return is filed more than 60 days after the due date.
Could tax extensions delay returns, continued
Extending your filing date does not postpone the payment of any taxes you may owe.
To avoid late fines, the IRS recommends that you estimate and pay at least 90 percent of your tax amount by the deadline.
Otherwise, you’ll have accumulated interest on your debt, which you’ll have to pay on top of your income taxes at some point.
Could tax extensions delay returns?
The IRS has issued more than 45million tax refunds to those who have filed their 2021 tax returns so far this year, CNET reported.
If you were not able to file your taxes by the April 18 deadline, it’s acceptable, but you might be delaying thousands of dollars that are owed to you.
When you submit your tax return this year, you may be eligible for a larger refund than you think, according to CNET.
You may get back the remainder of your increased child tax credit, reimbursement for child care expenditures, and extra stimulus money.
Remember that requesting an extension does not give you more time to submit your return; it just provides you more time to pay any taxes you owe.
Who can file late without penalty?
The following categories are automatically eligible for additional time to file and pay taxes without penalty, according to Fox59:
- Military personnel who have served or are currently serving in a conflict zone
- Support soldiers in war zones or a contingency operation to assist the Armed Forces Taxpayers from outside the US
- Some catastrophe survivors
What is the penalty for late filing?
For each month that the tax isn’t paid, the late-payment penalty is 0.5 percent of the outstanding total, according to the IRS.
Ten days after the IRS sends a final notice of intent to levy or take the property, the rate rises to 1 percent.
For each month, or portion of a month, in which an IRS installment arrangement is in force, the penalty is just 0.25 percent.
In all, the penalty may be up to 25 percent of the underpaid tax.
When are taxes due after extension?
The extension allows six more months to file your taxes.
Those who filed for an extension have until October 17 to submit their 2021 returns.
Is there a form to file for an extension?
To file for an extension, filers were responsible for filling out Form 4868.
Was there a tax extension deadline?
The deadline to file for a tax extension was April 18.
What is the purpose of a tax extension?
An extension offers you extra time to assemble your documents and submit your taxes later, but not to pay your taxes, according to NBC New York.
If you believe or know you owe money, figure out how much you owe and pay that amount when you complete Form 4868.
You don’t have to pay if you know you’ll be getting a refund when you file an extension.
The earlier you file your return, though, the sooner you’ll get your refund.
Families will feel impact of losing payments, continued
Phil Dean, an economist at the Kem C Gardner Policy Institute, told the outlet that there are some families that “will feel the impacts” of losing the monthly advance child tax credit payments.
And Mike Stevens, founder of Capital Wealth Managers in Lehi, Utah, encouraged families losing the monthly payments to plan carefully.
“Everyone that is impacted can just budget accordingly to say, hey, if you were counting on this money, it’s not coming in, here’s what we need to adjust to make sure that we’re going to be okay and still meet our obligations,” Stevens said.
Families will feel impact of losing payments
Alexandria Taylor, a single mother with three kids, said the $750 monthly payment made a big difference for her family that is used to tight circumstances.
“For a single mother, that’s what I’m used to, and it was nice to have that extra help,” Taylor told KUTV 2News.
She said the money went to necessities such as “utility bills, gas, and food.”
“I feel sad and a little worried because that’s what was helping us make ends meet,” Taylor said of the advance payments.
2021 and 2022 tax credit difference, continued
The credit was also distributed in monthly advance cash payments commencing in July 2021.
The credit for 2020 was only partially refundable; however, the credit for 2021 is totally refundable.
The credit for 2021 is geared primarily at low- and middle-income earners.
2021 and 2022 tax credit difference
Although there are some similarities, the child tax credit in 2021 differs dramatically from the allowance in 2020.
The credit will increase from $2,000 for children under the age of 17 in 2020 to $3,600 for children under the age of 6 and $3,000 for children aged 6 to 17 in 2021.
IRS warns about tax returns being rejected
The IRS has issued a warning about tax returns possibly being rejected.
Electronic returns missing one form will be automatically rejected for certain taxpayers, the agency said in a news release on Tuesday, March 22.
For those who need to reconcile advance payments of the Premium Tax Credit, Form 8962 must be filed with your return.
The Premium Tax Credit, or PTC, helps individuals and families pay for their health insurance premiums, and the form does not involve the child tax credit payments that are also a part of taxes for many Americans.
Indiana man stole CTC money
The incident was captured on video surveillance, and the man, identified as 33-year-old Michael Jarvis, was arrested on theft charges.
Just by doing weekly shopping – you can get rewarded.
And depending on how often you use cashback and how much you spend, it’s fair to say that you can earn hundreds of dollars each year, which may be a great help to families feeling the loss of the expanded child tax credit.
For example, major cashback site Ibotta claims its average user earns $150 each year from online purchases and groceries.
And TopCashback claims it gives its average member $345 in cash back.
Monthly stimulus checks proposed for families
Eligible families with children up to five years old would receive $350 a month, and $250 for children six to 17-years old.
By comparison, the Child Tax Credit gave families $300 a month for children under six, and $250 for children between six and 17.
The bill has yet to be formally proposed but could end up being bipartisan, with it being negotiated by both sides of Congress.
What is the CTC income cap?
Single parents or parents who file their taxes as single qualified for the full checks if they make $75,000 or less.
If you make more than $75,000, the monthly check was reduced by $50 for every $1,000 over the cap and eventually phases out completely.
When can I get the other half of CTC benefits?
If you received child tax credit payments on a monthly basis in 2021, the IRS will not tax that money when you submit your tax return the following year.
The payments were an advance on the child tax credit you’ll claim on your 2021 return and are not considered taxable income. However, the monthly payments may have an impact on the tax bill or refund this year.
They’ll be deducted from the credit amount you’re permitted to claim on your 2021 return since they’re child tax credit advance payments.
As a result, your child tax credit in 2021 will be reduced, resulting in either a greater tax bill or a lower tax refund.
To claim, IRS encourages online services
On the IRS website, individuals can use their online account to securely access the most up-to-date information about their federal tax account, including information on their CTC, and to view information from their most recently filed tax return.
From there, according to IRS, users can:
- View the amounts of the Economic Impact Payments received
- Access Child Tax Credit Update portal
- View data from most recent tax returns and access additional records
- View 5 years of payment history and any pending or scheduled payments
Permanent CTC expansion recommended by experts
A group of economists previously argued that Child Tax Credits worth up to $3,600 should be made permanent.
In a letter signed by 448 experts to Congressional leaders, they said a permanent boost to the 2021 child tax credits would “dramatically reduce childhood poverty.”
It cited a study released by the National Academy of Sciences that found that a permanent program would cost 16 cents for every $1 in new economic benefits.
Stats on CTC
Most Americans used their enhanced Child Tax Credit to buy food, clothes, and lodging, according to the Household Pulse Survey reported by GoBankingRates.com.
Food was purchased with 79 percent of the credit, followed by clothes with 46 percent, then housing and utilities with 40 percent each.
‘You’ve got to get creative’
Joi Lansdowne started toilet training her daughter Kaleasi, who recently turned 2, after the enhanced monthly child tax credits ended, and spoke to CNN about what the conclusion of the payments meant for their family.
The mom of two said she could save money on diapers, which run her about $100 every 10 days or so, at a time when money is tighter.
“That is a huge expense,” said Lansdowne, 26, who said she’d hoped she’d keep receiving the $300 monthly payments this year.
“When you don’t have the funds to cover those things, you’ve got to get creative.”