The expanded federal child tax credit helps families. Congress is debating its future.
Like millions of women, Sarah Anderson saw her income plummet during the pandemic when her two part-time jobs ended and looking after her four children and supervising online school took her days.
The federal child tax credit has helped fill the void left by this lost income. Parents started receiving monthly payments of $ 250 to $ 300 for each child on July 15 and will do so until December. They can claim the rest of their credits when they file their taxes next year.
The improved credit is only good for 2021, but advocacy groups are pushing to make it permanent.
Anderson used the first amount of the tax credit to buy back-to-school clothes for her ten, eight and six-year-olds. Anderson’s youngest is four years old and is on a waiting list for preschoolers.
“It kept our family going, honestly,” said Anderson, whose husband works as an accountant. “It hasn’t replaced my income, but it’s enough. I panicked on how to pay for back-to-school clothes.
Big impact, but some families are missing
For this tax year, the American Rescue Plan increased the federal child tax credit from $ 2,000 to $ 3,000 for children aged 6 to 17, and from $ 2,000 to $ 3,600 for children under the age of six.
Couples with a household income of less than $ 150,000 and heads of households with an income of less than $ 112,500 can claim the full amount. Credit begins to gradually disappear for households whose incomes exceed these thresholds and can be reduced by $ 50 for every $ 1,000 of income.
But some of the households most in need of cash may be running low. The Urban-Brookings Center for Tax Policy said that parents of around 2.3 million children nationwide might not receive the payments because they earned too little in 2019 and 2020 to file tax returns.
His analysis shows that parents of about 50,000 North Carolina children may not receive the credit. Households are spread across the state, but over 500 are found in Wake Forest.
State Representative Terence Everitt, a Democrat whose district includes Wake Forest, said he had not heard of residents in his district not receiving a tax credit, but would review the question in more detail.
Families are entitled to these tax credits and should get them, especially if they are in desperate need of them, Everitt said. “I find this worrying and something that we will need to follow up with these communities,” he said.
Millicent Rogers used the monthly payment for costs related to COVID-19 for his 10-year-old son, who fears he may be infected. Rogers’ son suffers from severe allergies that cause his nose to bleed when he is outside in hot weather. Blood flows on his masks, which require frequent washing.
The tax credit payments helped Rogers buy high-quality, well-fitting disposable and reusable masks, as well as pay to do the extra laundry at his apartment complex and buy more food for his son. can bring their lunch to school and avoid the online cafeteria.
Then there is the extra money needed for gasoline so that she can take her son to daycare after school; due to the shortage of drivers, bus lines are limited.
Advocacy groups say the increased credit and the provision making it fully refundable means parents who owe no taxes are eligible. And it had a disproportionate impact on black and Latin children.
“The tax credit is extremely powerful”, Eric Rodrigues, senior vice president of UnidosUS, said at a press conference last week. “This is already having significant anti-poverty effects on communities and especially children of color. One of the biggest and biggest changes we’ve seen since the previous round of stimulus has been to make it fully refundable so more Latino and African American children can receive the credit than ever before. “
Before the tax credit is fully refundable, about one in three children did not receive the full amount or at all because their parents made too little money to owe taxes, according to the Center on Poverty and Social Policy at Columbia University.
These were disproportionately children of color, children of single parents and those living in rural areas, according to the findings. Seventy percent of households headed by single women did not receive full credit.
Make extended credit permanent?
UnidosUS, Color of Change and Economic Security Project Action are supporting making this year’s child tax credit changes permanent and expanding it to include immigrant children with individual taxpayer identification numbers. The groups wrote a letter to Congress approving the tenure signed by about 50 organizations.
“There is no better investment that Congress can make than in the children of our nation,” the letter said. “It will pay off in the short term when parents feed these payments back into our local economies. And in the long run, the data clearly shows that lifting a child out of poverty leads to better nutrition, better test scores, and higher rates of schooling and college entry. “
The US House Ways and Means Committee proposed last week to extend the improved refundable child tax credit until 2025, The Washington Post reported. The extension is part of the $ 3.5 trillion economic package Democrats are crafting.
US Senator Joe Manchin, a Democrat from West Virginia, suggested last weekend that parents should be forced to work or go to school to get the credit. “Don’t you think that if we want to help children, people should make an effort? Manchin said during a Sunday appearance on CNN.
The Biden administration has touted credit as a way to dramatically reduce child poverty, and early research has shown such a reduction.
Adults in households with children saw a three percentage point reduction in food insufficiency in investigations after the first child tax credit payments landed in bank accounts, according to the US Census Bureau. The survey also showed a drop in the number of households struggling to pay their weekly expenses.
Food insufficiency in households without children was about the same before and after the tax credit was paid, the Census Bureau said.
Columbia University’s Center on Poverty and Social Policy found that the July payment lifted 3 million children out of poverty that month, while the the child poverty rate fell from 15.8% in June to 11.9%.
Anderson, who lives in Durham, is a former kindergarten, college and special education teacher. She left the class after the birth of her second child. The cost of childcare was more than her salary and returning to work didn’t make economic sense, she said.
The pandemic has taken a lot away from parents, she said, and it has helped to have extra money to cover basic needs.
“It’s not so much money that anyone is going to get rich,” she said. “Just to have a little more flexibility and to have a little more stress and not to worry.”
When her youngest child starts school, she plans to return to work as a substitute teacher so that her schedule matches that of her children. Child care is difficult to find during the pandemic, she said.
She also hopes Congress will keep the enhanced tax credit, even though she is not counting on it. “I don’t hope our government will do the right thing for women, families or children,” she said.