The Balance is here to help you navigate your financial life. To that end, we track the money-related questions you most search on Google so we know what’s on your mind. Here are the answers to some of your most recent inquiries.
Why is my child tax credit payment only $200?
Probably because you make more money than is allowed to claim the full credit (or at least the IRS thinks you do, based on your most recent tax return).
The new monthly child tax credit payments the IRS has been sending out since July are up to $300 per eligible child, but that’s only if your annual income isn’t over certain limits: $75,000 for an individual taxpayer, $150,000 for married couples who file their taxes jointly, and $112,500 for those filing as head of household. And the “up to” refers to not only the income limits but to the age of the child. Those with kids 5 and under get up to $300, while the maximum of $250 a month applies to children 6-17.
That could be why some parents are disappointed to see smaller amounts showing up in their bank accounts or mailboxes. (In an unusual twist, the IRS is distributing half of the federal tax credit each month, as an advance, rather than having it come out in the wash when you file your 2021 taxes. The maximum 2021 credit is $3,600 for a child 5 and under and $3,000 for older children. Unless you opt out of the monthlies, only the other half of that will be claimed at tax time next year.)
For every $1,000 of income above the income thresholds above, the credit is reduced by $50 a year until it reaches $2,000 per child, which works out to $166 a month. The amount doesn’t drop below $2,000 for those making under $200,000 (or $400,000 for married couples), but there is another phaseout for incomes over that, and it eventually dwindles to nothing.
Do I qualify for student loan forgiveness?
Chances are, no.
More than 563,000 student loan borrowers have received $9.5 billion in debt forgiveness from the Education Department since President Joe Biden took office in January, but very specific circumstances applied. The blanket student loan forgiveness you’ve likely heard politicians talk about—either $10,000 or $50,000 for every federal borrower, depending on who’s talking—is still just a proposal. But you still have some temporary relief, with payments and interest on federal student loans paused until the end of January 2022, thanks to a pandemic-era relief program that’s been extended multiple times.
Could the circumstances apply to you? Recent announcements from the department showed the following are included in the $9.5 billion of forgiven loans:
- The Education Department announced last week that it will wipe out $1.1 billion in student loans belonging to 115,000 borrowers who attended the now-defunct ITT Tech, under a legal stipulation called closed school discharges. To qualify for a closed school discharge, students must have been unable to complete their degree because the institution they were attending closed, and they must not have transferred credits to another school.
- Another batch of discharges totaling $5.8 billion was given to more than 323,000 borrowers with permanent disabilities that prevent them from working. The government has made the process for achieving forgiveness for these borrowers automatic, using Social Security Administration data to identify eligible borrowers. The administration of President Donald Trump paved the way for this data-matching process in 2019 by allowing the Education Department to use Department of Veteran Affairs data to identify disabled veterans eligible for similar loan discharges.
- Another $1.5 billion in student debt has been canceled under Biden through so-called borrower defense claims, where the department forgives loans owed by borrowers who have been misled by their schools.
When can I start filing my 2021 tax return?
Not for a while. You can prepare your taxes early, but technically you can’t file a return until the IRS opens tax season and starts accepting returns. And while it’s too early to know exactly which day the IRS will start accepting tax returns for 2021, the general rule of thumb is that the opening usually comes in mid- to late-January.
Note that last tax season was an exception. The IRS started accepting 2020 returns later, on Feb. 12, to allow its staff time to program and test its systems after a second round of stimulus payments and related tax law changes were enacted in late December.
As for when a date might be announced for this tax year? “Depends, but normally later December or early January,” an IRS spokesperson said in an email.
Even if you don’t know when tax season will officially open, it’s never too soon to begin collecting the paperwork you’ll need to complete your return when the time comes. In addition to gathering all the routine salary and wage forms, the IRS noted that the last stimulus check, approved in March as part of President Joe Biden’s American Rescue Plan, would fall under the 2021 tax year and will have to be reported next year. If you received that third stimulus check, the IRS should have sent you a Notice-1444-C acknowledging the payment. Put that letter with your tax records.