$3,600 payment deadline just days away as $350 ‘family stim checks’ could go out

How do I update my bank info?

To add or change your bank, you can do so through the Child Tax Credit Update Portal.

Once a change is made, it may not be reflected in the following payment, due to processing times.

Repayment protection, continued

You will not qualify for any repayment protection if your modified AGI is at or above the amounts listed below, based on the filing status on your 2021 tax return.

• $120,000 if you are married and filing a joint return or if filing as a qualifying widow or widower
• $100,000 if you are filing as head of household
• $80,000 if you are a single filer or are married and filing a separate return

Ways to qualify for repayment protection

If you qualify for full repayment protection, you won’t need to repay any excess amount paid to you by the IRS.

You qualify if your main home was in the United States for more than half of 2021.

Also, based on the filing status of your 2021 tax return, you qualify for repayment protection if your modified adjusted gross income (AGI) for 2021 is at or below the following amount:

• $60,000 if you are married and filing a joint return or if filing as a qualifying widow or widower
• $50,000 if you are filing as head of household
• $40,000 if you are a single filer or married and filing a separate return

CTC in different states, part three

In Maryland, the CTC is called the Child Tax Credit.

The state provides $500 per qualifying child.

To be eligible, children under the age of 17 must have a disability and the federal adjusted gross income must be less than $6,000.

CTC in different states, continued

In Maine, the CTC is called Dependent Exemption Tax Credit.

The state provides $300 per qualifying child and dependent.

CTC in different states

In California, the CTC is titled Young Child Tax Credit.

$1,000 is given to each qualifying family with earnings less than $25,000.

If household income is between $25,000 and $30,000, the credit will be reduced from $1,000.

According to NCSL, only children under the age of six can qualify for the program.

Poverty and CTC, part three

Columbia’s study found that child poverty is now at its highest since the end of 2020.

Despite the tremendous increase in unemployment caused by the coronavirus pandemic, government relief programs such as stimulus checks and unemployment benefits in fact lowered poverty rates in the United States.

Most dramatic for lowering child poverty was the expanded Child Tax Credit, which was made both more generous and extended to nonworking and poor parents who had traditionally been excluded from receiving benefits.

Poverty and CTC, continued

The study found that the overall monthly child poverty rate rose sharply between December 2021 and January 2022.”

Last March, Democrats in Congress passed a bill extending the Child Tax Credit from July through the end of 2021.

Almost all households in the United States received payments of $250 per month for children aged 6 to 17 and $300 per month for kids under the age of 6, however, the benefits were tapered off for wealthier families.

The annual cost of the initiative was estimated to be over $120billion.

According to official figures, more than a 61million children in around 36 million households got the payment in December.

Poverty may be linked to CTC

According to a new study published in February, the number of American children living in poverty increased considerably in January.

This is following the end of President Biden’s enlarged child benefit at the end of last year.

The child poverty rate jumped from 12 percent in December 2021 to 17 percent last month, according to Columbia University’s Center on Poverty and Social Policy, a 41 percent rise.

According to the report, an extra 3.7million children are now living in poverty compared to the end of December, with the largest percentage point increases occurring among Black and Latino youngsters.

IRS Free File: How does it work?

The first step in using this filing facility is to go to IRS.gov/freefile.

Then, to discover the proper product, use the “pick an IRS Free File offer” option.

After that, just choose the solution that best meets your needs and go to the provider’s website to start your tax return.

Although the filing season does not begin until January 24, IRS Free File providers will receive completed tax returns and keep them until that day, when they may be electronically submitted.

It is critical that you file your individual tax return before April 18, 2022.

IRS Free File: Providers

For 2022, the below providers that are participating in IRS Free File:

• 1040Now.NET
• ezTaxReturn.com (available in Spanish)
• FreeTaxReturn.com INC
• FileYourTaxes.com
• On-Line Taxes at OLT.com
• TaxAct
• FreeTaxUSA
• TaxSlayer (coming soon in Spanish)

IRS Free File: Who’s eligible?

Each IRS tax filing service has its own set of eligibility requirements. These laws are often dependent on age, income, and residency in a certain state.

Some vendors, on the other hand, give free state income tax return preparation.

If you make more than $73,000 per year, though, you can use IRS Free File.

This tool is open to everybody, regardless of their financial situation.

Keep in mind that this tool should only be used by persons who are confident in their ability to prepare their own taxes.

What is IRS Free File?

The IRS Free File Program is a collaboration between the IRS and tax preparation and filing software companies that offer free versions of their brand-name tax filing products.

Covid-19 and tax season 2022

The IRS is warning that a resurgence of Covid-19 infections, on top of less funding authorization from Congress than the Biden administration had requested, could make this filing season particularly challenging.

“The pandemic continues to create challenges, but the IRS reminds people there are important steps they can take to help ensure their tax return and refund don’t face processing delays,” IRS Commissioner Chuck Rettig said.

Avoiding a paper tax return will be more important than ever this year to avert processing delays, Rettig said.

Tax deadline 2022

The deadline for individual tax returns is usually April 15th.

This year, however, April 15 falls on a Friday, thus Emancipation Day will be honored in Washington, DC.

The deadline to file taxes is on April 18, 2022.

What is the American Rescue Plan?

On March 11, 2021, Biden signed the American Rescue Plan into law.

The $1.9trillion economic stimulus bill is meant to provide relief to the country in response to the Covid-19 pandemic.

According to the bill, “The American Rescue Plan will change the course of the pandemic and deliver immediate relief for American workers.

“The plan will build a bridge to an equitable economic recovery and immediately reduce child poverty,” it states.

Biden’s emergency legislative package aims to fund vaccinations, provide immediate and direct relief to families suffering from the pandemic, and support struggling communities.

Claiming the child and dependent care tax credit

The child and dependent care tax credit was expanded under the Rescue Act.

Families can now claim up to 50 percent of qualifying expenses, up from 35 percent previously.

Once that threshold exceeds that number, the credit percentage rate starts to phase out from 50 percent.

Specifically, families with more than one kid who spent $16,000 in qualifying expenses will be able to claim care credits of up to $8,000.

Claimants with one child can receive credits of up to $4,000.

WH economic adviser calls CTC expansion a puzzle

One of Joe Biden‘s economic advisors Heather Boushey gave a message to Yahoo Finance recently about the role of the child tax credit in the economy at the moment.

“The Child Tax Credit is a piece of that puzzle but it is a part of the overall package that the president put in place,” said Boushey.

“We remain optimistic that we will continue to see the economy moving forward.”

How are CTC amounts determined?

The amount of advance child tax credit payments you received during 2021 is based on the IRS’s estimate of the CTC amount you are allowed for the 2021 tax year.

The law requires this estimate to be based on two primary sources of information.

The first is your 2020 tax year return. If that return is not available, the IRS will refer to your 2019 return.

Second, any updated information you provide to the IRS in 2021, including any changes to the number of qualifying children, changes in your income, and changes in your filing status.

The agency understands that family and life situations change throughout any given year.

That’s why you may receive a total amount of advance payments which may be more than the amount of CTC you’re allowed.

When was the CTC established?

The child tax credit was established in 1997.

It has been around for more than two decades and a proposal in the American Rescue Plan, which was signed into law last March, increased the amount in payments.

“Previously, families received a credit worth up to $167 per month per child ages 16 and under,” Vox reported.

Tips to fight inflation

• Keep checking your bills regularly: You want to make sure there are no errors or overcharges.
• Research your providers: You want to ensure you’re getting the best deals and the most for your dollar.
• Understand your energy bill: When you know how much you’re using, it will help to keep costs down.
• Cancel any unused services: This can pertain to any subscriptions, streaming services or any service which you do not use often but are paying for monthly.
• Look for discount codes or coupons: Stores have sales and deals. Every penny counts when trying to save. Time your grocery shopping wisely.

Highest inflation in 40 years

The average American consumer now spends an extra $250 a month as inflation has hiked the cost of everything from groceries to fuel.

The latest numbers released by the Labor Department today show a 7 percent increase in December 2021.

That is the highest rate of inflation in 40 years.

No checks, even as inflation grows

American families that received child tax credit payments over the past few months are now facing a January without an extra cash boost from the government.

This comes as inflation rose 7 percent over the past year, the highest since 1982 and the fastest pace in nearly 40 years, according to the Labor Department.

For many, it is the first time since July 2021 without a child tax credit check, which has helped many households buy the basic necessities even as inflation rose.

What is CHILDCTC?

Your bank account labels deposits for the child tax credit as CHILDCTC, according to the White House website.

If you receive your child tax credit payments electronically, transactions will label the company name as “IRS TREAS 310” and the text description as “CHILDCTC.”

Increasing CTC coverage could reduce hardship

Finally, the NBER found, “increasing the CTC coverage rate would be required in order for material hardship to be reduced further.”

“Self-reports suggest the lowest-income households were less likely than higher-income families to receive the first CTC payments,” the paper added.

“As more children receive the benefit in future months, material hardship may decline further.”

“Even with imperfect coverage, however, our findings suggest that the first CTC payments were largely effective at reducing food insufficiency among low-income families with children.”