Understanding Why You Haven’t Received Your Child Tax Credit Payment & How to Fix It.

On July 15, the IRS began sending out advance child tax credit payments to around 39 million families in the US. However, some people have not received the money they were expecting, leading to confusion and questions. There are several reasons why a person may not have received their payment yet. These include the payment still processing, the payment is sent through the mail, pending eligibility, opting out of the payments, a child being too old, having a recent baby, having an income that is too high, the payment going to the wrong bank account, or the payment being garnished by a creditor. The IRS has provided solutions for each of these situations.

The payment is still processing

When the government sent out stimulus checks earlier in the pandemic, the deposits often dropped into different people’s accounts on different days due to bank processing times. In these cases, there’s nothing to do but wait.

If your bank says it still hasn’t received the payment and it’s been five days since your direct deposit, you can request a payment trace from the IRS. Fill out this form to get the process started.

It’s in the mail

If the IRS doesn’t have your direct deposit information, it’ll default to snail-mailing you a paper check. Paper checks typically take longer to arrive than direct deposit. (This is also true for tax refunds and stimulus checks.)

If four weeks have passed since the check was mailed to a normal address, six weeks since it was sent to a forwarding address or nine weeks to a foreign address, you can request a payment trace from the IRS. Begin with this form.

Your eligibility is pending

If the Child Tax Credit Update Portal returns a “pending eligibility” status, it means the IRS is still trying to determine whether you qualify. The IRS won’t send you any monthly payments until it can confirm your status.

If all else fails, you can plan to claim the child tax credit when you file your 2021 taxes next year.

You and your spouse opted out

Maybe you followed expert advice to opt out of the child tax credit installments due to your family situation (you normally owe the IRS, you share custody of your kids, you’ve got a major payment coming up, etc.). Or maybe you simply prefer to get your credit as a lump sum next year.

If you — and your spouse with whom you file taxes jointly — opted out, you won’t receive monthly payments. If you change your mind, the IRS says you can’t opt back in until “late summer.” (There is not the more specific date on the website.)

Your child is too old

In order to qualify for the advance payments, the dependent in question has to be under the age of 18 on Dec. 31, 2021.

If your kid misses the cutoff, you’re not completely out of luck — you just have to be patient. Families with dependents who are 18 years old or full-time college students between 19 and 24 will qualify for a $500 credit when they file taxes in 2022.

You just had a baby

Congrats! Alas, the IRS is generally using data from your 2020 or 2019 tax returns to calculate child tax credit payments. So if you’ve had a baby recently, the agency might not know about it.

You’ll eventually be able to update your family size information on the Child Tax Credit Update Portal, but not right now. Worst case, you can plan to claim the full credit on your 2021 taxes when you file next spring. (P.S. Your 2021 newborn probably qualifies for a $1,400 stimulus check, too, so make sure to claim the Recovery Rebate Credit, as well.)

Your income is too high

The advance child tax credit payments are subject to income limits over which they begin to phase out.

For single filers, the first phaseout starts at $75,000 in modified adjusted gross income. For heads of household, it starts at $112,500; for married couples filing jointly, it starts at $150,000. Your credit will decrease by $50 for every $1,000 in income that exceeds those numbers, bottoming out at $2,000.

It may dip even lower if you’re a single or head-of-household filer with a modified adjusted gross income over $200,000. Ditto if you’re a joint filer who makes over $400,000. People who earn over $240,000 as a single or head-of-household filer and couples that make over $440,000 are not eligible for the credit.

It went to the wrong bank account

The IRS used direct deposit info it had on file from your 2020 (and, if that hadn’t been filed or processed yet, your 2019) tax return and the stimulus checks to determine where to send your child tax credit payment. If you’ve changed banks since then, your money may have gone to the wrong account.

With the stimulus checks, if the IRS tried to send a deposit to a closed account, the bank rejected it and returned the money. The IRS then defaulted to mailing a paper check. This will likely happen with child tax credit payments sent to closed accounts, as well.

You can update your bank account information in the Child Tax Credit Update Portal. Do so by Aug. 2 to have it take effect for the Aug. 13 payment.

It was garnished by a creditor

Although the child tax credit advance payments are not being reduced to pay overdue taxes, past-due child support, or other federal and state debts, they are subject to garnishment from some entities. Non-federal creditors at the state, local and private levels can take your money.

Some states, like California, have specifically decreed that debt collectors can’t access people’s child tax credit payments, so you may want to check what the policy is in your area.

In conclusion

The IRS started sending out advance child tax credit payments on July 15th to millions of families in the US, but some have not received their expected payments due to various reasons such as payments still processing, being sent through the mail, pending eligibility, opting out of payments, the child being too old, having a recent baby, having a high income, payment going to the wrong bank account or being garnished by creditors. However, the IRS has provided solutions for each situation, such as filling out a payment trace form or updating bank account information on the Child Tax Credit Update Portal. Families can also plan to claim the child tax credit when they file their 2021 taxes next year.

FAQ

What are the advance child tax credit payments?

The advance child tax credit payments are monthly payments sent by the IRS to eligible families with dependent children in the US.

Why have some people not received their payments yet?

There are several reasons why some people may not have received their payments yet, such as processing delays, mailing delays, pending eligibility, opting out of the payments, or incorrect payment information.

What should I do if my payment is still processing?

If your payment is still processing, there’s nothing to do but wait. However, if it’s been five days since your direct deposit, you can request a payment trace from the IRS.

What if my payment was sent through the mail?

If your payment was sent through the mail, it may take longer to arrive than a direct deposit. If it’s been four weeks since the check was mailed to a normal address, six weeks since it was sent to a forwarding address, or nine weeks to a foreign address, you can request a payment trace from the IRS.

What does “pending eligibility” status mean?

If the Child Tax Credit Update Portal returns a “pending eligibility” status, it means the IRS is still trying to determine whether you qualify for the payments.

Can I opt out of the child tax credit installments?

Yes, you can opt out of the child tax credit installments if you prefer to get your credit as a lump sum next year or if you have other reasons for opting out.

What if my child is too old to qualify for the payments?

If your child is too old to qualify for the advance payments, you can still claim a $500 credit when you file your taxes in 2022.

What if I just had a baby?

If you just had a baby, the IRS might not know about it yet, but you’ll eventually be able to update your family size information on the Child Tax Credit Update Portal.

What if my income is too high?

If your income is too high, your credit will begin to phase out, decreasing by $50 for every $1,000 in income that exceeds the income limits. You may not be eligible for the credit if your income is above certain thresholds.

What if my payment went to the wrong bank account?

If your payment went to the wrong bank account, you can update your bank account information in the Child Tax Credit Update Portal by Aug. 2 to have it take effect for the next payment.