The increased Child Tax Credit (CTC) has been a boon for many U.S. families.
The American Rescue Plan Act (ARPA) bumped up the tax break for the 2021 tax year from $2,000 per each eligible child to $3,600 for children age 5 or younger, and $3,000 for youngsters ages 6 to 17.
Now, however, an online tool that the IRS created to make sure all who were due the increased child credit has been disabled.
That decision means that folks who were planning on using the online option, the Child Tax Credit portal, to get the remaining tax credit amount now must file a full 2021 tax return.
Bifurcated distribution fall-out: The Child Tax Credit portal was one of many COVID-related changes to tax laws and how the IRS handles them.
In addition to increasing the credit amount, ARPA also tasked the IRS with sending out half of the amounts to eligible recipients. That would give these folks some money sooner, rather than making them waiting until the 2022 filing season to claim the CTC on their annual returns.
The IRS distributed the advance CTC payments monthly from last July to December to around 36 million families. The deliveries were made to eligible taxpayers based on their information already in the IRS database from prior-year filings.
But the IRS also realized that some who were due the enhanced CTC weren't in the agency's system. They didn't make enough money to require them to file an annual tax return.
So that these nonfilers' early CTC amounts could be sent, the IRS created a new online tool, the Child Tax Credit portal.
The agency encouraged nonfilers to use the portal to fill out a shorter return. The idea was that this simplified process would be more appealing to taxpayers who don't usually interact with the IRS.
The portal also allowed all who accessed it to update personal information, such as income, mailing address, and bank account data. The IRS then used the portal-supplied info to deliver the advance credit amounts.
A second, separate online tool was created at the GetCTC.org webpage. This option, a collaboration between the Biden Administration and the nonprofit Code for America, is mobile friendly and also available in Spanish.
Temporarily turned off: But that was then. Now, the Child Tax Credit online portal is disabled.
The only way for taxpayers who aren't legally required to file a tax return to get the rest of their CTC amounts is to, you got it, file a 2021 tax return.
The IRS Child Tax Credit Update Portal webpage says, in bold-face type, "Do not use the Child Tax Credit Update Portal for tax filing information."
Instead, the IRS page offers visitors the chance to "Use this tool to review a record of your: Eligibility, Bank account and mailing address, Processed payments." It also offers a way for people to sign into or create their It also offers a way for people to sign into or create their online taxpayer account.
The GetCTC page tells individuals looking to access the tool there informs visitors that, "You can claim your CTC when you file taxes in 2022."
The IRS says the Child Tax Credit portal suspension is temporary. After we get through Tax Day on April 18, it will be restored. The GetCTC page says that likely will be in May, and offers an option to sign up for email or text updates on the tool.
Looking to ease tax chaos: Officials say the short-term disabling of the portal, which actually came at the request of the White House, is necessary to ensure that the IRS can effectively process the millions of incoming 2021 tax year returns.
There was concern that taxpayers who are required to file a Form 1040 would use the non-filer portal instead. That, they say would create chaos. (Insert your own IRS pandemonium joke here.)
Such mistaken use already was seen last year, with taxpayers required to file using the non-filer portal. But, since that happened after the main 2021 filing season ended, "those mistakes were kind of no harm, no foul," Gene Sperling, a senior adviser to President Joe Biden, told Politico.
"But if that happened at the beginning of the filing season this year, these families would get through the Child Tax Credit portal and then when they try to do their normal tax filings, they would look like they were trying to file their taxes twice," said Sperling. "That could lock them out of any benefits for months while the IRS tries to sort out their situation."
Now, taxpayers much file a 2021 return to get the rest of their Child Tax Credit, even if they have any other tax obligations. One way to do so is to use the services of Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites across the country. You can read more about this free tax prep and filing help at my post about how VITA and TCE volunteers are back, helping taxpayers prepare and file returns for free.
"Once the normal tax season is over, we will again do an all-out push to get those remaining low-income parents and grandparents who haven't filed to do so through this simplified process," he said.
You also might find these items of interest:
- 10 reasons to file a tax return even if you don't have to
- 5 reasons your tax refund this year might be smaller
- IRS TACs open for walk-in tax help on Saturday, March 12