Does that IRS letter bring good news about next month's child tax credit payment?
Millions of families are now receiving news about the 2021 child tax credit payments. Check the mail and your bank account on July 15.
Some 36 million families in the US are getting the IRS letter on upcoming payments.
A letter from the IRS can send a chill through you, but it could be positive, too. The tax agency is now sending a notice that brings possible good news. A colleague assumed a recent letter in the mail from the tax agency was an audit notice, but it was about the advance child tax credit payments starting July 15. As many as 92% of households with children will qualify for this direct economic aid under the American Rescue Plan, which increased the child tax credit from $2,000 to $3,600 max per child.
This year is different from previous years. Half of the payment's total amount will be distributed automatically in advance partial payments through the end of 2021. Parents can opt out of the monthly installments to receive the lump sum when filing taxes in 2022 if that's preferable, too. Starting tomorrow, look out for information on Child Tax Credit Awareness Day and the new White House landing page, as well as new IRS online tools for enrolling and updating your details.
Also, keep an eye out for a second letter from the IRS for a personalized estimate of your child tax credit payment amount. In the meantime, you can use CNET's child tax credit calculator to estimate your total and read more about how to spend your child tax credit money when it starts to arrive. We recently updated this story.
Who receives the child tax credit letter from the IRS?
Congratulations. If a letter that looks like this arrives in the mail ...
A copy of the letter from the IRS that could soon find its way to your mailbox.
... it means the IRS thinks you could qualify for the upcoming child tax credit, based on information it has from your 2019 or 2020 tax return -- or details you registered using a nonfilers' tool. (Read more here about the new nonfilers' tool for the child tax credit.)
Until there's a check in your hand or direct deposit in your bank account it's not a good idea to treat this letter as a guarantee of a coming child tax credit payment, but it appears your chances are good. As with all IRS correspondence, hold on to this letter for your records.
What if you don't get a letter from the IRS?
If a letter never shows up in your mailbox, that doesn't necessarily mean the IRS is skipping you over for the child tax credit payments. After all, the vast majority of US households with children will receive some portion of the money earmarked for parents. For example, while 36 million families are intended to get a letter, up to 39 million households could qualify for the credit. That means off the bat, 3 million households could see a check, but no confirmation letter.
You might not get a letter if the IRS:
- Doesn't have enough information on hand to determine if you and your family are eligible.
- Doesn't have your current mailing address.
- Flags an issue with shared custody.
- Thinks you or your children don't meet the qualifications.
What you can do now:
- If you're normally not required to file taxes -- someone the IRS calls a nonfiler -- you'll have a chance to update your details, like the number of children you can claim, using a "Non-filer Sign-Up tool" that is available now.
- If you haven't filed your 2020 tax return yet but plan to, the IRS encourages families to do so as soon as possible using the Free File system available on the IRS website. That will allow parents to update their banking information. There are also some free tax prep days in the next couple of weeks (see dates and cities here).
- If you moved, make sure the IRS and the US Postal Service have your current mailing address.
- Make sure you know the eligibility and income rules for parents and their kids, including shared custody situations.
Mark the date on your calendar for the first child tax credit check next month.
Who gets a follow-up letter from the IRS?
If you do get the go-ahead from the IRS to receive child tax credit payments (which start July 15) you'll be treated to a second letter that confirms your eligibility. It also ballparks how much money you should expect to see in those checks.
The 2021 child tax credit payment schedule gets a little complicated from here, but the upshot is that half the total money will arrive in increments from July through December, with the remaining money coming your way after you file taxes in 2022.
You'll want to keep this letter so you can compare the estimate with what you eventually receive and to make sure you get the right amount for the right number of children you claim. In case there's a problem with child tax credit check delivery, this letter is almost like your receipt from the IRS, which you may need to reference in the future (like in a recovery claim on your 2021 taxes next year).
For more information about the child tax credit, here's how you'll use the online IRS portals launching by July and what happens if you have a baby this year.