Personal finance

A small child wearing a mask sits on her fathers shoulders outside of the Lenox Health Greenwich Village hospital during the nightly ‘Clap Because We Care’ cheer for medical staff and essential workers on May 29, 2020 in New York City.
Alexi Rosenfeld

Homeless families, or those that are between permanent addresses, can still get the new enhanced child tax credit.

It could mean hundreds of dollars each month for families struggling to stay in stable housing.

Homelessness rose during the coronavirus pandemic and ensuing economic recession, and more Americans may soon face housing problems as eviction bans and moratoriums lift. Nearly 25% of people are worried about eviction or foreclosure in the coming months, according to a May study from QuoteWizard by LendingTree.

Of those who are homeless in the U.S., about 33% are in a family with children, according to a recent report from the nonprofit Children’s Defense Fund.

For those families, the enhanced child tax credit established by the American Rescue Plan could be a huge help. In 2021, the maximum credit is $3,600 for children younger than age 6 and $3,000 for those between 6 and 17. The money will be sent to most families in monthly installments beginning July 15 – the payments are $300 per month for children younger than 6 and $250 per month for those aged 6 to 17.

Here’s what homeless families need to know about claiming the credit.

Can I still file a 2020 tax return after the deadline?

The key to getting the child tax credit and upcoming monthly payments is to file a 2020 tax return.

You can file a 2020 return with the IRS even though it is after the May 17 deadline. If you don’t owe the IRS any money – which is likely for the lowest-income Americans – you won’t face any penalty for filing late and can receive the full refund you’re entitled to.

There are a few ways people can file for free, including through the IRS Free File program (if adjusted gross income is less than $72,000), or with other online platforms such as Credit Karma. The IRS VITA program, which offers free tax preparing and filing assistance to low-income Americans, those who don’t speak English and seniors, has locations open for drop-in services through June.

In addition, the IRS is launching at least two portals to go along with the new enhanced child tax credit, one of which may include a way for nonfilers to send in a simplified tax return or otherwise give the agency their information to claim the credit.

What if I don’t have a permanent address?

Many homeless people may have trouble putting down a permanent address to receive a paper check or debit card.

If you don’t have a permanent address, the easiest way to ensure that you receive the upcoming monthly child tax credit payments is to file your taxes with direct deposit information and elect to get your refund sent that way. If you already did that, you don’t have to take any further action with the IRS – the payments will begin July 15 and will be deposited into your bank account on a monthly basis through December.

Next year, you will have to file your 2021 taxes to claim the remaining half of the credit and can again receive your refund through direct deposit.  

More from Invest in You:
‘Top Chef’ Shirley Chung pivoted her business, became a voice for Asians
Lack of workers is hurting small businesses’ ability to keep up with demand
‘Huge’ opportunities await women entrepreneurs, venture capitalist says

What if I don’t have a bank account?

Some people may also be unbanked, adding another layer of difficulty in getting the payments they’re owed.

When you file your 2020 taxes, you can put down an alternate address if you do not have a permanent one, according to the IRS. This address could be that of a friend or relative, a trusted service provider like a shelter, day-care center or transitional housing program.

This is where the IRS will send your refund, as well as the monthly child tax credit payments going forward. The payments will come either as a paper check or a debit card, according to the IRS.

It’s unclear right now how the IRS will determine who gets a paper check and who gets a debit card. However, the hope is that those who are unbanked will receive a debit card that is reloadable, similar to how some Social Security benefits are sent, said Elaine Maag, a principal research associate at the Urban-Brookings Tax Policy Center.

“You wouldn’t need a bank to cash the check, which can be very expensive if you’re unbanked, and you wouldn’t need a bank for a direct deposit,” she said.

What if something changes between July and December?

The IRS has said that it will launch a suite of products to help people with the child tax credit, including the ability to update information and opt out of receiving the advance monthly payments.

This will likely include places for people to update the IRS on changes in their household, such as having a new baby that is eligible for a monthly payment. It may also include a place for people to update their bank information or address.

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.

CHECK OUT: How to make money with creative side hustles, from people who earn thousands on sites like Etsy and Twitch via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

Articles You May Like

Chrysler parent Stellantis laying off 400 salaried U.S. workers due to ‘unprecedented uncertainties’
Dividend Tax Rates in Europe, 2023
Biden’s Budget Blueprint
Feds seek seizure of two New York apartments worth $14 million tied to former Mongolia leader in alleged mining scheme
Largest U.S. sportsbooks join forces to tackle problem gambling