Glitches, confusion leave parents without advance child tax credit payments  Michelle Singletary Color child tax credit illo | Misinformation, glitches and delays are all fueling confusion about the monthly child tax credit payments that the IRS has begun sending to tens of millions of American families. This initial batch of payments, directly deposited July 15, is the first of six this year. The payments are part of the Biden administration's effort to get money into the hands of struggling families. Families with children 5 and under can receive up to $300 a month per child. For parents of children ages 6 through 17, it's up to $250 a month per child. Those who got their money were elated, with many people posting on TikTok to chronicle their excitement. One TikTok user wrote, "Got my 1st child tax credit payment. Biden paying more child support than my baby daddy." Rep. Alexandria Ocasio-Cortez (D-N.Y.) asked her nearly 13 million Twitter followers, "Who's gotten their CTC today? How is it going to help you out?" One Phoenix follower said the $250 payment went to help pay part of a $400 bill to the utility company SRP. "Normally we're choosing between food and the SRP bill — not this month thanks to Democrats!" But many parents are also emailing journalists or taking to Facebook, Twitter, and Reddit to complain or ask why they haven't received their payments yet. Some didn't get as much as they thought they were due, while others don't have a clue as to why the payments haven't been deposited into their bank accounts. One South Carolina mother reached out to The Washington Post upset that she did get the advance child tax credit payments for her two children aged 9 and 10 — $500 — but not for her 17-year-old. Had Treasury and the IRS communicated better about the age cutoff, she wouldn't have been worried. While it's true that the payment is available for some 17-year-olds, it's not available if the child will turn 18 this year. "Oh, okay," the relieved mother said when I called to interview her. Parents are upset that they received letter 6417 from the IRS confirming that their children were eligible for the advance payments but when they checked their status on the IRS online portal they are told they aren't eligible or "there are no processed payments at this time." This is what happened to Courtney Bendickson from Colorado Springs. She and her husband did everything they are supposed to do to get the direct deposit payments for their two children, who are ages 10 and 11. They filed a 2020 return, which has been processed. The first round of monthly payments was based on returns processed by the IRS — not just filed — by June 28. They provided the IRS with banking information. And they know the tax agency has what it needs to make a direct deposit because the couple received all three of the stimulus payments electronically. But the July 15 pay date came and went and the $500 payment that was supposed to hit their bank account didn't show up. Bendickson said she called her bank and was told there is no pending payment from the IRS. She used the Child Tax Credit Update Portal to double-check, and got the message that nothing was pending. She even tried to call the IRS several times and was disconnected before reaching anyone. "There are so many people in the same situation that I am, and that's really unfortunate," she said. "It is frustrating." Bendickson said they could really use the money. Her husband was furloughed twice last year. "It was rough," she said. "He was on unemployment for a while." Things are okay now, but the money would take some financial pressure off, she said. "With the kids going back to school, being able to buy supplies and clothes and all those things, it just would be really helpful," she said, sounding exasperated. "I just don't know what's going on. You know, if the IRS had a glitch and they were able to come out and say, 'Yeah, there's a glitch and we're working on it,' then at that point all you do is wait. For me, I just want to know why." The IRS says if, after five calendar days from the official pay date an electronic payment hasn't shown up — and the bank says it hasn't received the payment — mail or fax payment trace Form 3911 "Taxpayer Statement Regarding Refund." You need to wait four weeks for a mailed check. Wait six weeks to request a trace if a payment was mailed and you have a forwarding address on file with the post office. "Many different factors come into play for the eligibility of these payments," the IRS said in a statement. "We continue to work on this important credit, and we will be closely monitoring the program as we move forward." The IRS has not reported any widespread problems at this point, which is also distressing for Lisa McGruder from Pontiac, Ill., who doesn't understand why she too hasn't received the first advance payment. The McGruder family is eligible for $750 a month for three children, who are 7, 8, and 10. McGruder is collecting unemployment. Her husband is waiting on disability payments to kick in after being diagnosed with cancer. The McGruders filed their 2020 tax return and didn't have a problem receiving their refund or all three stimulus payments. "Got the letter in the mail from the IRS saying we were eligible for the child tax credit, so we were thinking it's a slam dunk," McGruder said. Unlike many others, McGruder was able to reach someone at the IRS. "The person gave me very vague answers," she said. "We had planned our budget around the monthly payments. You get that hope built up and then it gets dashed." Given the hard times they've had because of the pandemic and her husband's health issues, McGruder said she had planned to use a small part of the money to treat her 7-year-old daughter to a mermaid tail for swimming. "The kids are getting excited about getting school clothes. And then you sit there thinking, well, now what am I supposed to do? I don't make enough each week to pay for all of this," she said. "I just felt like a failure as a mom, just devastated. Then you just pick yourself up and it's like, what can you do about it? The IRS is going to do what they do, right?" Are you having problems with the IRS? Share your story with The Washington Post. Reader Question of the Week If you have a personal finance or retirement question, send it to colorofmoney@washpost.com. In the subject line, put "Question of the Week." Please note that questions may be edited for clarity. Q: I was stumped recently by a friend's question about how to improve her credit score. There is so much conflicting info (and scams) out there on this subject, and the credit agencies seem to be shrouded in a veil of secrecy regarding their scoring methods.
I have a very high score, but hers is lower. We both pay our bills on time and are stable financially, but I have more credit cards. Does she need to open cards to "build her credit?" She doesn't need the cards, and I only have them for the perks, and I pay them off every month. A: Actually, the three major credit bureaus - Equifax, Experian, and TransUnion - and the company that produces the most used credit score, FICO, have a great deal of information online about how to improve your credit history, which then leads to a better score. From Equifax: How Might My Actions Affect Credit Scores? From Experian: How to Improve Your Credit Score From TransUnion: Five Simple Steps Toward Better Credit From FICO: How to repair your credit and improve your FICO Scores Here's the bottom line: The two factors that contribute the most to your score are paying your bills on time – all the time - and reducing the amount of debt you have outstanding. You can also boost your score if you have a mix of various types of debt, such as a home loan, car loan and credit cards. However, you may see your score dip, if only temporarily, when you pay off your home. I know this drives people nuts. "Isn't paying off debt a good thing?" they ask. "Having a mix of revolving accounts (like credit cards) and installment accounts (such as loans) is generally good for your credit scores," according to Experian. But, "if the loan you paid off was your only installment account, you might lose some points because you no longer have a mix of different types of open accounts." Read: Why Did My Credit Score Drop When I Paid Off a Loan? Without more information, I'm going to guess that the friend's score is still very good. Once you reach a certain point, a higher score isn't necessarily going to get you anything more than bragging rights. The FICO scoring model ranges from 300 to 850. But generally, once your score is over 750, you're going to get the same deal as perhaps someone with a perfect score of 850 – all other things being equal. I should know, I have a perfect 850 credit score on various scoring models. I don't get a special "you're perfect" interest rate. When my husband and I applied for a mortgage refinance several years ago, the banks only wanted to know if our scores were above 750. That was the cutoff point to their best interest rates. Still, if for the fun of it you desire perfection, here's a column that you should read: How I got a perfect 850 credit score If you are a young adult or know one trying to establish credit, read: My adult child built a good credit score in just three months. Here's how she did it. In Retirement News Part of planning for retirement and then living on the money you've saved or invested for retirement is keeping up with the issues that you need to know. In this section, I feature blogs, news stories, new research, surveys, and government policy changes that could affect your retirement. If you see a news story or issue you think would help folks, let me know and I'll check it out and share it with newsletter subscribers. This week, let's talk about the recent stock market tumble. As you probably know, and the Post reported, on Monday the Dow slumped more than 700 points, as investors become worried that a resurgence in coronavirus cases will derail the economic recovery. "Many market watchers are fearful the uptick will lead to a resumption in travel and business restrictions," wrote Post reporters Taylor Telford and Hamza Shaban. The Dow and S&P 500 rebounded on Tuesday and by Wednesday morning, global stock markets were up. "Investor optimism has been buoyed by higher U.S. corporate profits despite a rise in cases of the virus's more contagious delta variant," the Associated Press reported. "Overnight, Wall Street's benchmark S&P 500 index gained 1.5 percent, recovering much of the previous day's loss." I asked some financial experts to weigh in on how people investing for retirement should react to this latest market turbulence. Christine Benz, director of personal finance for Morningstar: "It's a platitude, but it's always helpful to maintain a long-term mindset if you're a stock investor. Historically, stock investors have out-earned investors in less volatile assets like cash and bonds. Part of the reason they've been able to do so is that stock investors have had to put up with more short-term volatility and periods when stock-reminder performance is downright scary. Market shocks like this one are also a reminder to people with near-term expenditures--people getting to retire or send kids to college--that they shouldn't have all of their assets in stocks. As a stock investor, the last thing you want is to have to sell stocks after they've fallen. By holding your near-term spending needs in safer assets like cash and bonds, you can insure against the risk of having to touch your stocks when they're down. As stock market performance has been so excellent for such a long time, it has been easy to get complacent about that risk." Carolyn McClanahan, a certified financial planner who founded the fee-only Life Planning Partners based in Jacksonville, Fla.: Market upheavals are a good reminder of why it is important to have an investment policy in place. An investment policy spells out how much you should be invested in risky assets such as stocks and safe assets such as bonds. If you have a short time frame for needing your money, you should have a higher allocation to bonds. If your time horizon is greater than 10 years, a heavier allocation to stocks is more appropriate. Sticking with your allocation through good and bad markets keeps you from making emotional decisions like selling out at the wrong time. Nick Holeman, a certified financial planner and head of Financial Planning at online financial adviser Betterment: "The biggest lesson from March 2020 should be that stocks can rebound almost as quickly as they drop. If you get off the rollercoaster now, you may miss the next ride. But if you are nervous, don't sell your existing stocks. Instead, take the monthly savings you would normally use and just hoard cash. I call this "don't catch a falling knife" and it helps nervous investors take action without selling their existing stocks. When you hear 'the Dow dropped over 700 points in one day!' it sounds pretty scary. But 700 points is really only less than 2 percent. When you view it that way, it doesn't sound as intimidating." Daniel Demian, financial advice expert at personal finance app Albert: "Although it can be worrying to see our investments perform negatively, market volatility and pullbacks are normal. It's sustained periods of growth without corrections or slight pullbacks that often require caution. For the market to be efficient, the market should price in all available information. This is why we'd actually expect surprising news about a possible rebound in covid cases to rattle the Dow and other indices. The good news is knowing volatility is normal and even expected, sticking to your investment strategy will be vital for your portfolio's success." Retirement Rants and Raves What are your thoughts about saving for retirement? If you're retired, how is it going? What advice would you have for others about retirement? This is your space to rant or rave about anything related to retirement. Send your comments to colorofmoney@washpost.com. Please include your name, city, and state. In the subject line put "Retirement Rants and Raves." Responses may be edited for clarity. | 
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