Child Tax Credit: when will a refund be issued on tax return?
The American Rescue Plan provides more generous Child Tax Credits, but the IRS may struggle to send out the money while distributing the third stimulus check.
The IRS have confirmed that they have already started distributing refunds on tax returns for millions of Americans, which will initiate the first payment for the new Child Tax Credit.
The tax authority have confirmed that refunds were sent out from the first week of March for those who filed online, choose to receive any potential refunds by direct deposit, and who had no errors in their filing.
The Child Tax Credit update was a key component of President Joe Biden’s American Rescue Plan, which was finally signed into law last week. The new legislation ups the top entitlement to $3,600 for children aged less than six, and to $3,000 for those aged between six and 17.
How to track your tax refund and Child Tax Credit payment
The Child Tax Credit is essentially an additional refund to be paid to filers who qualify for eligibility. As we are still in the midst of tax season 2020 and the IRS has also begun distributing the third stimulus check, there may well be delays for some recipients.
Helpfully the IRS does provide two ways to check the status of your tax refund online, which should make it easy to keep track of your payments.
How many tax refunds have already been paid?
The tax process is of even greater importance this year with many looking to take advantage of the federal support provided to help people deal with the pandemic. Millions are expected to file for a Recovery Rebate Credit to reclaim the money for any missing stimulus check payments and the number of early filers was far higher than a typical year.
The latest figures from the IRS show that as of 5 March 2021, more than 36 million tax refunds had been issued, with an average refund of $2,990 distributed per claim. A total of 55.7 million individual tax returns had been received by then, with 49 million of them already processed.
However this progress could soon take a hit as the IRS is expected to focus manpower on the more pressing task of distributing the $1,400 stimulus checks. As they provide direct support for struggling Americans the stimulus checks will be prioritised but there are concerns that this will affect the administration of the tax return system.
Despite this, the IRS maintain that they have no plans to adjust the 15 April tax return deadline. Other than Texas, who had their deadline extended by two months to allow time to recover after the winter storm knocked out much of the state’s infrastructure last month, there will be no additional time granted to filers to ease the burden on the IRS.