Stimulus Update: 5 Ways to Speed Up Child Tax Credit Payments
- The IRS warns of processing delays this year.
- Filing electronically and requesting direct deposit can speed the process.
Take steps to make sure your 2021 tax return does not get stuck in a review pile.
The only way to receive what you're owed in Child Tax Credit payments is to file your taxes. And the faster you file, the faster the IRS can get to work on your refund. The "typical" Child Tax Credit is $2,000 per eligible child. But due to President Joe Biden's American Rescue Plan, Child Tax Credit payments were boosted by up to $1,600 (depending on the child's age). And rather than wait until tax time, parents could collect one-twelfth of the credit each month for the last six months of 2021.
Let's say you have two children, ages 3 and 6. The Child Tax Credit for the 3-year-old is $3,600, and for the 6-year-old, it's $3,000. Now, if you met income eligibility and chose to receive six monthly payments in 2021, you received $550 each month ($300 for the 3-year-old and $250 for the 6-year-old). In total, you received $1,800 on behalf of the 3-year-old and $1,500 on behalf of the older child. That means you're still owed the back half of the credit.
As mentioned, the only way to receive the back half is to file your 2021 tax return. If you opted out of monthly payments, tax time is when you'll claim the entire Child Tax Credit amount due to your family.
No. 1: File early
The IRS has been very clear about backlog and staffing issues and warns parents that refunds could be slow to hit banks this year. In short, the tax administrators are still trying to work on a backlog of 2020 tax returns. And, due to the number of employees dealing with the omicron variant of COVID-19, the IRS is shorthanded at the worst possible time. The earlier you file, the faster you'll see that Child Tax Credit payment.
No. 2: Use direct deposit
The IRS calls direct deposit "the best and fastest way to get your tax refund." When there's no paper check being sent your way, there's no risk of it being lost or damaged before it hits your mailbox. With the push of a button, the IRS can transfer money into your bank account.
No. 3: File electronically
Another thing the IRS recommends is to file your tax return electronically. Pre-pandemic, it took six to eight weeks to receive a refund if you filed a paper tax return. The same refund would arrive in around 21 days if you filed the return electronically. And remember, the six to eight weeks refund estimate was before the IRS found itself with a backlog of old tax returns to wade through. While we don't know the precise amount of time it will take to receive a paper refund this year, it's safe to assume it's longer than six to eight weeks.
No. 4: Consider tax software
Here's the deal with tax software: It's accurate. In addition, a good tax software program is like sitting next to a CPA who gently reminds you of deductions and credits you might have missed. Plus, IRS Free File is available to any person or family with an adjusted gross income of $73,000 or less last year.
Read more:Best Tax Software for 2022
No. 5: Take it (a little) slow
Rather than filing taxes while watching your favorite TV show, focus solely on taxes. Check and double check your return for silly errors, like a missing Social Security number. There are few things more frustrating than learning that you won't receive your refund for months due to a mistake that could have easily been caught before pushing the send button.
The trick this year is to be smarter than the average bear. Give yourself every advantage -- including filing early, filing electronically, using tax software, and double checking the details. After all, it's your money. Why wait longer than necessary?
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