Child tax credit problems explained: Delays, wrong amounts, missing payments

The second advance child tax credit payment was officially released Friday to 36 million eligible US families. The majority of households should have received it automatically through direct deposit, but the IRS has issued some important alerts about August payments. First, a number of families who got their first batch in their bank account will be receiving this second check by snail mail, which takes a few days longer. And some families who never got money in July will have their total credit adjusted, resulting in higher monthly payments starting with the August check. 

Other families with an immigrant spouse reported not getting their July payment due to an IRS glitch. These mixed-status families should be receiving their August money, which should include a portion of the July payment. Another issue that could be causing delays or inaccurate payment amounts for eligible households is outdated banking information or income details, since the IRS bases this year’s credit on older tax returns. Out-of-date information could also result in missing payments if the IRS thinks your family doesn’t qualify. 

If any of these issues are affecting you, we can show you how to fix them using the IRS Update Portal before your September payment. We’ll also show you how to verify eligibility and unenroll from the monthly checks if you’re worried about owing money to the IRS next year. And heads up: To use the Update Portal you may need to create an ID.me account. Keep reading if you think you need to file a trace for a missing child tax credit payment. We’ve recently updated this story.

Why is my August payment coming by mail and not direct deposit? 

The US Treasury Department and IRS issued a statement that due to a technical issue, a small percentage of households who received their July 15 payment by direct deposit will get their Aug. 13 payment through paper check in the mail. While this could affect as many as 4 million families this month, it’s expected to be a one-time issue that will be resolved by the Sept. 15 payment. 

The easiest way to see how you’ll be receiving your August money is to logon to the IRS Update Portal to view your payment history. If it says your payment is coming by mail, give it several business days to arrive. If you have direct deposit set up, make sure all the information is accurate. If you haven’t set up your banking details yet through the online portal, you should expect all further payments to come as paper checks.

If your payment history in the portal says that the money was sent through direct deposit, check your bank account again in the next few days to make sure it’s cleared. According to the White House website, transactions will contain the company name “IRS TREAS 310” with a description of “CHILDCTC” and an amount for up to $300 per kid (unless there’s been an adjustment due to a missing July payment). Don’t get this deposit confused with those for stimulus checks, which show up as “TAXEIP3” when deposited. Also, if you’re waiting on a tax refund, it’ll show up as “TAX REF.”

Reasons you didn’t get a child tax credit payment

The problem	What to do
You didn’t file a 2019 or 2020 tax return.	Use the IRS nonfiler portal.
Your payment is coming in the mail.	Give it time to arrive as it could take several days.
You can’t find any reason why you didn’t get a payment.	It may be time to file a payment trace with the IRS.

I think my family is eligible, so why didn’t I get any money? 

Last month, several families in “mixed-status” households — with one parent being an immigrant and where the eligible children have a Social Security number — didn’t receive their first monthly payment due to an IRS mishap. According to the tax agency, those families do qualify and should be receiving a portion of that owed July money together with their August payment, and any additional money could come later in the month.

If your family didn’t get a July payment but your first monthly advance check did come in August, your total advance credit will be divided over five months instead of six months. That will result in larger advance monthly payments, according to the IRS: up to $360 per month for each child under age 6 and up to $300 per month for each child ages 6 through 17. 

There are a few other reasons why you might not have received a payment: 

• Your family never filed a 2019 or 2020 tax return, so the IRS doesn’t know that you qualify. If that’s the case, use the non-filer sign up tool online to register for payments. 
• You lived in the US less than half the year in 2019 or 2020, and the IRS doesn’t think you qualify, even if you now have a primary residence in the US. 
• Your new baby or adopted dependent became part of your household after you filed your 2020 tax return, and you’re not able to update those details in the IRS portal yet. 
• Your household’s circumstances in 2020 disqualified you, even though your situation changed in 2021. This could be the case if your income was previously too high or if there was a shift in a custody arrangement. 

If you’ve verified your eligibility and your account says that your payments were issued but they’re still missing, you may need to file a payment trace with the IRS. To do that, you’ll need to complete Form 3911 (PDF) and mail or fax it to the IRS. Only do this if it’s been at least five days since the scheduled deposit date, or four weeks since the payment was mailed by check. We can explain how to file a trace here. 

Why did I get a different child tax credit amount than I’m owed? 

There are a couple reasons why families are reporting inaccurate payment amounts. The first step is to verify your eligibility through the quick eligibility assistant online. The next step is to use CNET’s child tax credit calculator to see how much you should be receiving based on your income and the ages of your dependents. 

The primary reason why parents are getting inaccurate payment amounts seems to be because their adjusted gross income or number (or ages) of children has changed between tax seasons, and the IRS hasn’t yet adjusted for the difference. Parents of children younger than six can receive up to $300 per month or $250 for children aged from six to 17, but those amounts phase out for higher earners. So, if your income was significantly higher on your 2020 tax return, you might actually be underpaid this year based on the prior figures. 

Another thing to keep in mind is a potential overpayment if your income went up this year (meaning the IRS is sending you too much money) or if your child ages out of a payment bracket (meaning the IRS is basing the money on your five-year-old instead of your six-year-old). The age brackets for dependents apply to how old your child will be at the end of this calendar year. 

In the next month or so, the IRS says you should be able to sign on to the Update Portal to make these kinds of adjustments. 

What if the IRS portal says I’m not eligible, but I got a payment?

With the IRS sending out millions of child tax credit payments, along with keeping up with income tax refunds and unemployment tax refunds, it’s certainly possible the agency could have made a mistake. For instance, some people who weren’t qualified for the stimulus checks still received payments.

If you’re absolutely positive you’re not eligible for the enhanced child tax credit payments but you got a payment, you’ll need to return that money to the IRS. Start by using the Update Portal to unenroll from future payments — the next deadline to opt out of the monthly payments is Aug. 30. This will help prevent you from having to pay back more money when you file taxes in 2022.

Will I have to repay the IRS child tax credit money next year?

If you’re eligible for the full amount of child tax credit money, you won’t have to pay it back. However, if you don’t qualify for the full amount because of a change in your income or number of dependents but receive the full amount anyway, you may need to pay back that extra money. 

The IRS is using what it calls “payment protection” so if you do receive an overpayment but fall below a set income level, you don’t have to pay back an overpayment. Above that income level, you will have to pay back some or all of the extra money. Here’s more on the income levels and how the payment protection works.

Will the new child tax credit payments become permanent?

As of right now, the enhanced payments are temporary, just for this tax 2021 year. That means after you get your final payment with your tax refund in 2022, the child tax credit will revert back to its original amount from previous years, which was lower. However, it’s possible Washington could extend the payments in 2025 — or make the changes permanent. While no decision has been made yet, we’ll keep you updated on the outcome.

For more information, here’s how to opt out of future child tax credit payments. Also, here’s how to track down your child tax credit payment if you didn’t receive it. Not sure you got the right amount? Use CNET’s child tax credit calculator to see how much you should get.