Last chance to get advance child tax credit is fast approaching It could be a financial lifeline just in time for the holidays — a child tax credit payment to cover food, rent or presents for children in households struggling to make ends meet. The American Rescue Plan expanded the credit for the 2021 tax year to a total of $3,600 for children 5 and younger and $3,000 for those ages 6 to 17. In July, parents of children 5 and younger began receiving up to $300 a month per child. For parents of children ages 6 to 17, it's up to $250 per child. The final direct deposit is scheduled for Dec. 15. The payments are being sent in advance, enabling households to claim the credit early instead of waiting until they file their 2021 tax returns. People can get these benefits even if they don't work or receive no income. For those whose income has been too low to file a return, be sure to use the online sign-up tool, linked from IRS.gov. This link redirects to whitehouse.gov. The administration collaborated with a nonprofit, Code for America, which created a non-filer sign-up tool that can be used on a mobile phone and is also available in Spanish. Nov. 15 is the deadline — the last chance — for families to use the non-filer tool. Because the advance payments are stopping at the end of the year, any family signing up now will get a single lump-sum payment in December — up to $1,800 for each child in the younger category and up to $1,500 for each child in the older one. Like any other eligible family that files a return, these families will need to file a 2021 return next year to claim the remaining portion of the child tax credit. Eligible families that filed a 2019 or 2020 income tax return were supposed to have received the money without any action on their part. With the Oct. 15 payment, the Internal Revenue Service has sent out payments to about 36 million families, totaling about $61 billion. And reports have indicated that the payments have helped reduce child poverty. But some glitches and delayed return processing prevented payments to some families. And it's possible that millions of eligible families missed out on the advance payments, mostly because they earn too little to be required to file a tax return. The task to find eligible families that don't file a federal tax return and that have not claimed the advance child tax credit payments is daunting. A report from the Government Accountability Office was critical of efforts by the Treasury and the IRS to identify people at risk of not receiving the child tax credit payments. The GAO recommended that the agencies estimate the number of individuals, including non-filers, who are eligible for the advance payments, measure the 2021 participation rate based on that estimate, and then use this information to develop targeted outreach and communications efforts for the 2022 filing season. In response to the GAO report, the IRS said the agency plans to meet with Census Bureau officials and pointed out that it has sponsored events across the country to help non-filers access the online tools. There's an information page at irs.gov/childtaxcredit2021. Despite these efforts, the publicity about the advance payments has been poorly communicated, with key information tucked away in agency news releases or densely, technically written FAQs. For instance, the IRS announced on Oct. 29 a feature that allows families already receiving monthly child tax credit payments to update their income information on the Child Tax Credit Update Portal. "In some cases, families who are currently receiving monthly payments that are below the maximum may qualify to have their payments increased. This could happen if, for example, they experienced job loss during 2021," the IRS said. Even this late in the payment process cycle, the extra money could help. Except families had until midnight Nov. 1 to make changes so that it could be reflected in the Nov. 15 payment. Really, what average parent would be checking the IRS website over the Halloween weekend? If a family was unable to make a change by the Nov. 1 deadline, it still has a chance to enter an update for the December payment, but that has to be done by Nov. 29. The IRS has done a lot to get money into the hands of millions of families while dealing with a horrendous tax season complicated by the pandemic. Still, the glitches, lackluster communication efforts and unreasonable deadlines are frustrating folks who are short on patience because they are trying to feed their families and keep a roof over their heads. 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 have several annuities. What is a good information source on annuity strategies after retirement? A: One of my go-to sites about investing is Investopedia.com. So, I looked there for information I could pass along about retirement and annuities. Here are some articles I think you will find helpful. You may know this already, but let's start with the basics: What Is an Annuity? and Understanding the various types of annuities and how they work From there, here are some articles about pricing: How to find the right annuity provider for your retirement Passing the Buck: The Hidden Costs of Annuities Retirement Annuities: Know the Pros and Cons: There's a secure way to avoid outliving assets—but watch out for fees There's this: The Pros and Cons of Annuities Now, about your question, read: How a Fixed Annuity Works After Retirement Selecting the Payout on Your Annuity Are Variable Annuities Subject to Required Minimum Distributions? How to Rollover a Variable Annuity Into an IRA What Happens to My Annuity After I Die? In Retirement News Part of planning for retirement and then living on the money you've saved or invested 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. A story about a scam this week is yet another reminder about the difference between wise investing and speculation, or, in the case of the following story, an investment con. Read: 'Squid Game'-inspired cryptocurrency that soared by 23 million percent now worthless after apparent scam On another retirement front, I think you'll find this analysis interesting: The latest twist in the 'Great Resignation': Retiring but delaying Social Security Retirement Rants and Raves This is also 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. I'd like to continue the discussion from last week about the solvency of Social Security. Social Security and Medicare face long-term financing shortfalls and have been significantly affected by the pandemic and the recession of 2020, according to reports released last month by the Social Security Board of Trustees. The trustees projected that the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be insolvent in 2033, meaning there will be enough income to pay out only 76 percent of scheduled payments. Senior research economists at the Center for Retirement Research at Boston College argued in a brief last month that the news about the coming shortfall is too dire. "News coverage of the Trustees Report often emphasizes the trust fund depletion date and de-emphasizes the importance of the ongoing tax revenues," wrote Laura D. Quinby and Gal Wettstein. Here's the brief: How Does Media Coverage of Social Security Affect Worker Behavior? In last week's newsletter, I asked the following questions: Do headlines about the coming shortfall in Social Security scare you? Are you likely to make any financial changes because of the news? Are you thinking of claiming early? Did you claim early for fear Social Security would be broke? One reader, Kevin, wrote: "Personally, I'm not counting on anything from Social Security, even though I've paid into it for decades. With one party wanting to cut taxes but not spending and the other increasing spending but unable to increase taxes, we have a recipe for disaster. I have contributed the max to a 403(b) or Thrift Savings Plan for years, have a Roth IRA for my wife, and we are on target to pay off the house right around retirement. Anything that Social Security might provide us would be a cherry on the top. But we also know we're lucky to be in this position." Gene SirLouis of Washington, D.C., wrote: "It will not run out. Congress won't let it happen." "I don't worry about it," another reader emailed. "Old people vote and anyone trying to cut it back would be voted out pretty quick and the politicians know it." One reader said the shortfall contributed to her decision of when to claim Social Security. She wrote: "I need to take Social Security as late as possible (e.g., waiting until 70) if there are likely going to be cuts. Why? So that my cuts are coming from a higher base rate." Dennis Ruane of Fort Washington, Md., wrote: "We chose to defer claiming as long as possible. With Money Market funds and CDs paying nearly nothing, the 8 percent a year Social Security increase looked very attractive, and we're fairly confident the government won't make a significant change that would hurt us." Keep the Social Security comments coming. I'll share more next week. Send your comments to colorofmoney@washpost.com. | 
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