The IRS said some families eligible for the advanced child tax credit who received a split payment in September may have gotten a little too much. As a result, their October, November and December payments may be reduced slightly.
It goes back to what was described as a "technical issue" with the September payment. This caused about 2% of child tax credit recipients to get their payments late.
One of the issues, the IRS said, was with parents who file their taxes jointly -- the basis of which determines how much money each family gets. If the parents want to opt out or change their banking or address information, then both parents must apply for that change. If only one makes a change, only half the money will be affected.
"In some of these cases, the split payment caused a delay in making payments, and further caused individuals to receive slightly more than the correct payment in September," the IRS said in a statement. "To address this, the payment that each spouse receives in October, November and December will be reduced slightly to adjust for the overpayment."
The IRS said the typical overpayment was $31.25 per child between 6 and 17 years old and $37.50 for each child under the age of 6. That means the October, November and December payments for affected parents will be reduced by $10-to-$13 per child. Affected parents will receive letters explaining what happened.
The credit is $3,600 annually for children under age 6 and $3,000 for children ages 6 to 17. Eligible families who did not opt-out will receive $300 monthly for each child under 6 and $250 per older child, which would explain the differences in the overpayments based on age.
My payment was issued, but I didn't get it. What do I do?
If parents didn't get their October payment, the IRS said they can request a payment trace to track their payment, but only after one of these time frames has elapsed.
- 5 days since the direct deposit date and the bank says it hasn't received the payment.
- 4 weeks since the payment was mailed by check to a standard address.
- 6 weeks since the payment was mailed, and you have a forwarding address on file with the local post office.
- 9 weeks since the payment was mailed, and you have a foreign address.
To start a trace, complete Form 3911 and fax or mail it in. Instructions on where to send it are at the bottom of the form.
What is an "advanced" child tax credit?
In the past, eligible families got a credit after filing their taxes — either as a lump-sum payment or a credit against taxes owed. But now six months of payments, which started in July, are being advanced monthly through the end of the year. A recipient receives the second half when they file their taxes.
The benefits begin to phase out at incomes of $75,000 for individuals, $112,500 for heads of household and $150,000 for married couples. Families with incomes up to $200,000 for individuals and $400,000 for married couples can still receive $2,000, which is what it was before the amount was increased in March.
The expanded child tax credit, which was passed as part of the American Rescue Plan COVID relief bill, is set to lapse after a year, though President Joe Biden has proposed extending it through 2025 and would like it to be made permanent. Extending it is part of the discussion involving the $3.5 trillion reconciliation bill being negotiated in Congress.
If all the money goes out, the expectation is that could significantly reduce poverty — with one study estimating it could cut child poverty by 45%.
The Associated Press contributed to this report.