$3,000/$3,600 Child Tax Credit: why are some payments lower than expected?

The first round of payments for the new Child Tax Credit programme went out this month but some families have reported that they did not receive their full entitlement.

$3,000/$3,600 Child Tax Credit: why are some payments lower than expected?
Emily Elconin REUTERS

From 15 July the IRS began making payments as part of the new Child Tax Credit, after the system was overhauled in the American Rescue Plan. So far more than 35 million families have receive the support, which will continue on a monthly basis for the remainder of 2021 at least.

However with such a massive nationwide distribution effort underway it appears that some families have been underpaid or missed out entirely. If your Child Tax Credit payment was less than you expected, we take a look at some of the reasons why…

Why haven’t I received my full Child Tax Credit entitlement?

The new system introduced the monthly payment structure but there is still some confusion about how much parents will receive. Children under the age of six will receive annual payments totalling up to $3,600, so the monthly payments will be $300 per child. Those aged between six and 17 will get $3,000 per year, which works out at $250 per month.

However these figures are the maximum amount that parents are entitled to and some higher-income households will receive less. Single filers with an adjusted gross income of less than $75,000; a head of household earning less than $112,500; or married couples earning less than $150,000 will be entitled to the full amount.

Above those thresholds the monthly amount on offer gradually phases out; decreasing by $50 for everyone $1,000 over the limit. To work out exactly how much you should be getting from the Child Tax Credit, this handy online calculator will let you calculate your payment.

It is also worth bearing in mind that the children’s age brackets (younger or older than six) apply to your child’s age at the end of 2021. A child who turns six during 2021 will only be entitled to a maximum monthly payment of $250.

Why have I not received a Child Tax Credit payment?

Some parents are reporting that their Child Tax Credit monthly payment has not arrived at all, which could be down to a few reasons.

Firstly, while the majority of eligible families will receive the payment automatically, those who do not usually file taxes will have to register for the programme because the IRS would not otherwise have their details on file. If this is you, you can complete the process quickly and easily using the IRS’ online Non-filers Tool online portal.

If you share parenting responsibilities with someone who lives in a different household it is possible that they have received the payment rather than you. The IRS will not divide the monthly payments between two parties and instead use a their own Child Tax Credit guidelines to decide which parent will receive the money.