IRS child tax credit: White House shows state-by-state impact on families
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The number of children living in poverty was decreased by 40% when the were sent last year from July to December. Since it ended, the number of children living in poverty has increased dramatically.
President Joe Biden is pushing Congress to extend payments “so no one has to raise a family in poverty.” The White House backed up its case on March 8 with data showing the state-by-state impact of the child tax credit on American families.
Parents receive their final enhanced child tax credit payment as part of child tax credit payments help families, but could also be part of a larger picture to support the economy and boost employment.from their 2021 federal tax return. The credit will then revert to its original $2,000 amount to be claimed in 2023. According to the White House, not only could an extension of
We’ll explain what it could mean for you if enhanced child tax credit payments are extended. To find out more, here are the. Also see how the this year could help maximize your refund.
It could lift millions of children out of poverty
When the child tax credit ended in December, approximately 3.7 million more children fell into poverty in January. On average, one in seven children live in poverty, according to Elaine Maagprincipal associate researcher at Urban Institute. This amounts to approximately 13 million children.
If enhanced child tax credit payments were to be extended — and made fully refundable — it could reduce child poverty by 40%, or up to 9 million children, Maag told CNET.
The extra money could help offset the effects of inflation
in February each year, just after the end of the monthly child tax credit program. For families who once received up to $300 per child per month until now nothing, the price increases for groceries and gas can be frightening.
However, if child tax credit payments were extended, these families wouldn’t feel as strapped for money and it would help offset inflation, Maag said. If they are in a better financial situation, they will be less affected by price increases.
If it is not extended, these families could face food shortages and have difficulty paying their rent and utilities.
This could lead to an increase in employment
For many families, a parent must stay home to care for their children because they cannot afford child care. But with that extra money coming in every month, it could give parents the leeway they need to pay for a babysitter or daycare so both can go to work. This could lead to increased employment in the United States, Maag said.
On the other hand, some secondary household maintainers might work less or not at all if there is additional income to support their family, as they would not need to pay for child care.
What if there is a work requirement to get the payments?
One of the reasons the enhanced Child Tax Credit payments were not extended last year is that there was no work requirement. Sen. Joe Manchin, a Democrat from West Virginia, said he would prefer parents only be eligible for the credit if they are working and filing their taxes. His vote is essential to move the renewal of the program forward.
However, one work requirement excludes many needy families. For example, those who cannot afford to work due to child care costs are already in a bind, but would not qualify for the credit. In addition, parents who lose their jobs would also lose the money they get from credit.
Maag said the child tax credit is more likely to help parents return to work if there is no work requirement, as the existence of the credit is not a key factor. not to work.
How could the child care rate be reduced to no more than 7% of income assistance?
During his address to Congress, Biden said reducing the cost of child care could help change living standards for working parents. “The middle classes and workers should not have to pay more than 7% of their income to take care of their young children,” he said.
By bringing the childcare rate down to no more than 7%, parents could spend more of their money on other basic needs rather than childcare. Maag said the cost of childcare would likely increase, but it wouldn’t be as overwhelming.
Currently, many parents cannot go to work because they cannot afford quality child care, and some rely on neighbors and other family members who are not not as reliable. Lower child care costs would help parents considerably financially.
Will extending the credit cost taxpayers more money?
Yes, it will cost people more money in the short term, Maag said, but income for children is an investment. Here’s why: Poor children, on average, tend to have poorer health outcomes because they don’t get the right amount of nutrition. They also have lower grades for the same reason and are less likely to graduate from college. If children grow up in these circumstances, they are less likely to get a well-paying job in the future.
Therefore, it is more costly in the long run not to make these payments to families in need, Maag said.
What’s wrong with getting an extension?
In 2021, Congress passed the US bailout, whichfor most U.S. families, increasing the amount to $3,600 per child under 6 and $3,000 for children 6-17. He also created for the second half of the year. These payments ended in December and there is no indication yet that the child tax credit will be enhanced for 2022.
Biden’s Build Back Better plan, which would have included an extension of the child tax credit, appears dead. But Biden is pushing for Congress to pass individual elements of the economic proposal, which would include extending enhanced payments.
Some senators have expressed interest in passing a stand-alone bill without adding a work requirement. However, Manchin should be on board to push through an appropriation extension in the Senate.
For more information, here. Too, to get the rest of your child tax credit money.