Child tax credit ending will push 10 million kids back into poverty
Washington, D.C. residents Cara Baldari (left), her 9-month old daughter Evie, and Sarah Orrin Vipond (right) join an event in front the U.S. Capitol Dec. 13, 2021.
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Sen. Joe Manchin (conservative Democrat from West Virginia) stated that Sunday was “Sunday.” he would not supportBiden’s $1.75 TILLION Build Back Better program, which would have likely killed the bill and brought with it an extension of the enhanced child credit.
Nearly 10 million children, according to analysis by the Center on Budget and Policy Priorities a progressive think-tank, are in danger of falling below the poverty line again or sinking deeper into poverty without the enhancement credit.
An additional 27 million people will see their credit reduced, with roughly half being Black or Latino. The credit for 65 million children who are eligible will be reduced in the New Year.
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The December child tax credit payment may be the last
“It is not unusual for July to be a surprise for families. [the child tax credit]It would have been positive to see, but this time it is a surprise,” Elaine Maag (principal research associate at Urban-Brookings Tax Policy Center), said.
Credit for child tax credits
In March, the American Rescue Plan was enacted. It expanded the child tax credit and increased its scope.
It was raised to $3,000 from $2,000 and there is a $600 bonus available for children aged 6 or under for 2021 tax years. The credit also included monthly payments that began July and continue through December. Deposits of $300 were made for children aged under 6 years old and $250 for 6-17 year-olds. Families will file tax returns for 2021 next year to receive the second half.
Because the credit was fully refundable and therefore accessible to more kids than ever before, families with no earned income can still receive it for their eligible children.
The data revealed how enhanced credit has helped families receive payments in just a few short months. Financial instability fellMore children had enough to eatSome parents were even able to work more.
Children could be less poor if the credit is extended beyond 2021. The credit could be extended beyond 2021 to reduce child poverty by approximately 8.4%, which is a drop of around 40%. according to a studyThe Urban Institute.
Without an expansion
The child tax credit will not disappear completely, but that’s what we can be certain of. The regular child credit will continue to be available for families when they file their 2022 tax returns in 2023.
This credit, however, comes with smaller monthly payments and doesn’t reach as many kids as the enhanced benefits.
These changes have caused thousands of dollars to suddenly vanish from family budgets in an instant.
Kris Cox (Deputy Director of Federal Tax Policy at the Center on Budget and Policy Priorities) said that a mother with a child and who is working full-time at the federal minimum wage and also has a toddler and second grader, would receive $6,600 through the Child tax Credit.
The child tax credit for 2022 would only provide $1,800 to the same family if the enhanced credit expires. This is a difference of $4,800
Cox said, “That’s a really substantial amount that could go towards supporting that family,”
Data also showed that most parents spent their monthly payment on groceries, school supplies, and increasing savings.
Cox said that “Monthly payments support families throughout the year.” “Rent, electricity, food, childcare, transportation — all of these costs occur on a monthly basis.”
How families can help now
The lapse of monthly payments is a time-consuming event for families. December 15 was the last day of check delivery.
Maag said that they could now review their January budget and make revisions.
“Families do that all the time — they juggle bills, they choose which ones to pay, they forgo opportunities in order to make sure they have enough money to cover their needs in the next month,” Maag said.
To get the second credit, they can file 2021 taxes so that they are ready to file them as early as possible. Trenda Hackett (CPA) and technical tax editor for Thomson Reuters’ tax and accounting businesses said that part of this process involves making sure they get all their payments this year.