You may be wondering if the monthly Child Tax Credit checks you cashed late last year would eat into your tax refund if you are one of the millions of American parents who spend tax season filing in numbers and hope your tax software spits out a refund. It will for some.
Why you might receive a smaller tax refund amount?
From July to December 2021, a typical household receives $300 per month for each child under the age of five and $250 for children aged six to seventeen. Most parents were qualified for half of the whole benefit on their 2021 taxes because of these so-called early contributions.
When paying their taxes in 2021, check recipients will no longer be able to claim that portion of the money. Previously, the benefit was only available during tax season and was restricted to $2,000 per child.
The maximum credit was increased to $3,000 or $3,600 depending on your child’s age as part of the Biden Administration’s American Rescue Plan. For higher-earning parents, the additional benefit faded off in both circumstances, as per KTXL-TV via MSN.
As a result, many parents who would have claimed $2,000 per child in prior years would now claim $1,500 or $1,800 depending on the child’s age at the time of filing. For some, this may result in a smaller tax refund amount.
The IRS has started sending out letters to taxpayers documenting earlier payments and instructing them on how to report them on their 2021 taxes. Some people may owe money back if they were overpaid, according to the agency.
Payments in 2021 will be based on prior years’ returns, thus some circumstances, such as an increase in income or a child aging out of the benefit, may result in a smaller amount payable to the taxpayer.
What to do if I did not receive a tax refund?
If everything else on your tax refund remained the same from 2020 to 2021, you could owe somewhat more this filing season if you claimed the credit. However, the majority of individuals are dealing with new factors.
Per AOL, you may not receive a dime if your tax information was revised or rectified and indicates that you are entitled a refund due to the IRS failing to update your account. This is due to no fault of your own.
If you haven’t gotten your tax refund after six weeks, go to your local IRS office or call the federal government for assistance. You may also use this page to check the progress of your refund.