Susan Tompor: Child tax credit money a no show in January; look for IRS letter instead

Susan Tompor, Detroit Free Press on

Published in Business News

But the IRS had some "plus up" payments for people who received a smaller amount in March or April based on their 2019 tax returns but qualified for more money after filing a 2020 income tax return, such as if their income dropped during the recession last year.

The IRS was issuing stimulus payments to some taxpayers all the way through December.

You'd turn to Letter 6475 to detail how much stimulus money you received in 2021 and whether you'd qualify to claim the Recovery Rebate Credit when you file the 2021 tax return this year.

The IRS noted that most eligible people already received the payments. "However, people who are missing stimulus payments should review the information to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2020 or 2021," according to an IRS alert.

Nothing is simple

The child tax credit payments received are based on factors, such as income, filing status, and the number of children and their ages. As a result, you can't just assume you're eligible to receive the same amount of money as your best friend or neighbor.

The expanded credit was temporary, giving parents as much as $3,600 for each qualifying child, up from $2,000. Half of that money was to be paid each month from July through December.

As part of the monthly payments, families received up to $300 for each child through age 5 or up to $250 each for child from age 6 through 17.

The numbers any family might receive can vary all over the map. The Center on Budget and Policy Priorities and Wolters Kluwer Tax & Accounting ran some examples for the Free Press, based on the structure for the expanded credit in place for 2021.


Let's say a family has two children, a boy who is three years old and and a girl who is 12.

For this example, the maximum child tax credit owed for those two children would be $6,600 for a married couple filing a joint return or a single parent making $80,000 or less. The advance monthly payments would have been $550 each month for six months.

The remaining portion due would be $3,300 — half of the $6,600 in the child tax credit available for this example — once a 2021 tax return was filed.

But the credit goes down with a higher income. A single parent making $150,000 would be eligible in this example for a total credit of $4,700. When filing a 2021 return in that example with two children, the single parent would be owed $2,350.

A married couple in this example would still get at total $6,600 credit at the $150,000 mark.

Move the income up to $350,000 and the single parent doesn't qualify for any child tax credit but the married couple filing a joint return would still qualify for a total of $4,000 — which includes $2,000 when filing a 2021 return.

Reconciling the credit becomes more complicated, of course, when there is a significant difference in incomes in 2020 and 2021.

Tax filers aren't going to pay taxes on their advance child tax credits — or that third stimulus payment — but they do need to file tax returns to make sure they received what they're qualified to get.

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