Late tax refunds, stimulus money and child tax credit payments frustrate families, and poor IRS communication isn't helping  Many parents complain they can't get through to the IRS to inquire about delayed child tax credit payments. | When you promise people something and they see others getting it while they do not, it can make them angry. This sums up the feelings of many struggling families who are still waiting for the IRS to send them their tax refunds, stimulus payments, or monthly installments of the advance child tax credit — or all three. On July 15, the first batch of advance child tax credit monthly payments — worth roughly $15 billion — was sent to about 35 million families. The Treasury and IRS said more than 2.2 million additional stimulus payments totaling $4 billion were disbursed last week under the American Rescue Plan. And nearly 4 million taxpayers who overpaid their taxes on unemployment compensation have been sent refunds that average $1,265. This is good news for families who have gotten their money, but it also fuels the frustration of others who are struggling and haven't received their payments. A private Facebook page, created in March, has close to 1,000 members who share stories of failing to receive the third stimulus payment. A nurse complains about working during the pandemic and still waiting on the coronavirus-related relief. It's "7:09 in the AM and it's already impossible to get through," someone posted this week after trying to call the IRS. Many of the comments chronicle fruitless efforts to reach the IRS for answers. "It's one excuse after the other," another Facebook user wrote. Lisa McGruder and her husband from Pontiac, Ill., didn't get the $750 July child tax credit payment for their three children, who are 7, 8 and 10. The couple suspects that an amended return is holding things up. And they are likely right, although no one from the IRS has told them so. The couple, like so many others, had unemployment income last year. Under the American Rescue Plan, signed into law on March 11, Congress removed the federal taxability of unemployment benefits up to $10,200 for individuals and $20,400 for married couples filing jointly. To help taxpayers, the IRS said it would automatically refund money to people who filed their tax returns reporting unemployment income. The IRS said there was no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return. The IRS has a huge backlog of unprocessed returns. As of July 17, the IRS said it had 15.6 million unprocessed individual returns. In terms of priority, amended returns fall behind originally filed returns. This, in turn, can delay other payments, including the advance child tax credit payments, because the IRS now has to reconcile the two returns. And although the agency has said it could use people's 2019 returns to determine eligibility for the monthly child tax credit payments, once the latest return — in this case, the 2020 return — has been processed, that's the one the IRS uses. If the two 2020 returns — the original and amended documents — are stuck in the processing pipeline for further review, then the agency can't determine the eligibility for claimed children. Many families may be seeing a note saying either that they are not eligible or that the child tax credit is pending. "The IRS continues to work hard to process tax returns and amended returns to ensure that taxpayers receive the correct refund. For taxpayers who qualify for the Advanced Child Tax Credit or Economic Impact Payments after their returns or amended returns are processed, we will automatically make any additional payments," the agency said in a statement. "The IRS understands the importance of these payments, and we appreciate the patience of taxpayers during this unprecedented period." One reader reached out on behalf of her disabled mother, who is waiting for child tax credit payments for three children, 17, 16, and 5. The mother's amended return was filed and accepted on May 10. The IRS told her it could take 16 weeks to process the return. "I helped her set up the child tax credit portal, which shows that her status is 'pending' and that she will not receive monthly tax credit payments at this time," the adult daughter emailed. "I am almost positive this is because of the amended return." That's part of the problem with the IRS. It's not great at communicating to folks why there's a delay, so people are often left guessing what's wrong. "My mother and I have spent countless hours on the phone with the IRS over the past couple weeks, but no one has been able to provide any details on how to get this issue resolved," the daughter wrote. "My mother could really use the money. It seems that a lot of people are in the same boat. They either amended their returns, or their returns have been in limbo for several months, so their child tax credit advance payment status is also pending." In a recent report on how the government is responding to the pandemic, the Government Accountability Office (GAO) specifically pointed to the communication failings at the IRS. "With significantly more returns currently being held for manual review than in prior years, more taxpayers are trying to get information about the status of their returns and refunds," the GAO report said. "However, taxpayers have had difficulty obtaining status updates on their refunds from IRS, either by phone or online." The GAO also criticized the IRS's website for not providing enough relevant information regarding delays in processing people's returns. "Additionally, IRS's automated message on its toll-free telephone line for individual taxpayers has not been updated to explain refund delays or to include any other alerts associated with the 2021 filing season," the report said. When readers reach out to me hoping that I know what's going on, almost to the person they say they would be less worried if they just knew why their money hasn't arrived. The GAO is right. The Treasury and IRS would better serve the public if they truly understood this wisdom from author William H. Whyte: "The great enemy of communication, we find, is the illusion of it." We want to hear from you: 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: What is your opinion on long-term care insurance? Is it worth the high annual premiums, or is it better to invest the money and hope that the money grows faster than the eventual expenses for rehab or home health aides? A: Surveys continue to show that many people are unprepared for the cost of a prolonged illness, especially in their senior years. It's important to know that Medicare — except in very limited situations — does not cover long-term care. If you have limited assets and a low income and qualify for Medicaid, you may get coverage for long-term care. But you may find that many facilities don't accept Medicaid. Experts have long recommended that people purchase long-term care insurance to cover the cost of nursing homes, assisted-living facilities, and in-home care. The insurance is intended to cover expenses for those who need help with daily activities such as eating, dressing, and bathing, or who have a severe cognitive impairment such as Alzheimer's disease. Here's the problem, as you state in your question. The cost of this type of insurance can be pricey and has seen a lot of volatility. "Premiums can exceed $4,000 annually for a 60-year-old woman buying a midrange policy, a cost beyond the resources of many consumers," Howard Gleckman, a senior fellow at the Urban Institute, wrote recently in a Post article, "Five myths about long-term care." Under Myth No. 5 - The government can jump-start private long-term-care insurance - Gleckman continued, "Insurers reject one-third of prospective buyers because they have pre-existing conditions or a family medical history of chronic disease such as dementia. In short, few consumers want to buy these policies, and most insurers don't want to sell them." Here's a good benchmark on whether the insurance is worth it from nolo.com: "Consumer and financial experts generally agree that LTC insurance is a bad investment unless the monthly premium is 5 percent or less of your monthly income. When calculating this 5 percent figure for future years, bear in mind that your premiums are likely to rise, while your income will probably drop." Read: Long-Term Care Insurance: The Risks and Benefits As the National Association of Insurance Commissioners (NAIC) points out, the number of insurers offering long-term care insurance has decreased from slightly more than 100 in 2004 to about a dozen in 2020. "Additionally, premium rates for newly issued policies have risen as the remaining writers have refined their pricing," the NAIC says. It's important to understand what happened with pricing, especially if you have an older long-term care insurance policy (LTCI). "Policies were initially priced when LTCI experience used to calculate rates was not fully developed," the NAIC said in a blog post earlier this year. "As experience developed, it became apparent that the initial pricing assumptions for the number of policyholders qualifying for LTC benefits and the length of time claimants would remain on claim were understated. Additionally, actual policy lapse rates proved to be much lower than initially assumed, resulting in higher insurer exposure to claims payments. Misestimation of initial pricing assumptions has made it necessary for insurers to increase LTCI rates to ensure their future solvency." I recommend you read a guide the NAIC has pulled together: A Shopper's Guide to Long-Term Care Insurance. The guide can help you figure out if the insurance is right for you. Here's some additional reading to help with this decision. Long-Term Care Insurance – To Buy or Not to Buy? Alternatives to Buying Long-Term Care Insurance For seniors hoping to age in place, the cost of in-home care just got a lot more expensive For many families, the costs of long-term care are horrifying 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 retiring early. There are so many stories about people who decide to retire before 60. I'm always interested in how they do it and what advice they would give others. Business Insider wrote a feature about Fritz Gilbert, who retired in 2018. Gilbert detailed the financial moves he made that allowed him to walk away from his 9 to 5 job. Read: A man who retired comfortably at 55 says 4 smart choices helped him reach his goal 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. Herb Taylor of Freeport, Maine had some retirement advice that always sparks a lot of debate. "If at all possible, delay collecting Social Security until age 70," he wrote. "The additional 32 percent benefit will make a big difference and remember: Social Security benefits are inflation-adjusted." For many, this advice is true. But it's not the right advice for everyone. Here are some columns for consideration of when to start collecting Social Security retirement benefits. Should you take Social Security early? For some, coronavirus changes the math on waiting until you're 70. The great Social Security benefits debate: Take it early or wait? Apply early or delay: When is it wise to collect Social Security? What you don't know about Social Security could cost you a lot of money | 
Email 
