Child Tax credit felt a great impact as the Build Back Better Act was passed by the house of rep. Finally, the Child became fully refundable.
What makes one eligible for the child tax credit?
To qualify for the child tax credit, these are the few requirements for you(and your spouse if jointly applied).
- The applicant must have filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return
- The applicant must have a child under age 18 at the end of 2021 and has a valid Social Security number.
- Earn annual income below $150,000 (for joint tax return), $112,500 for household heads and $75,000 for single filers.
Visit the IRS official website for more information on your eligibility.
Waiting is all that can be done at this point. Families expecting payments are being advised to check the IRS’ website and social media for the latest updates and to keep checking their mailboxes and bank accounts, as these payments are due soon.
The new child tax credit in the coronavirus financial aid plan was meant to provide extra money to many American families, it has a profound effect on families, and experts believe it could reduce poverty in the United States.
The Biden Administration’s $ 1.9 trillion federal stimulus package includes a temporary expansion of the child tax credit. Some California experts liken it to a universal basic income and say it is urgently needed, especially for California families with undocumented parents who were left out of the previous stimulus in the era of former President Donald Trump.
“It will cut the number of poor in half,” Elaine Maag, principal research associate at The Urban Institute, said in a videoconference hosted by Sandy Close, executive director of Ethnic Media Services (EMS).
Recent official estimates of poverty show that 10.5% of the US population, or 34 million people, was poor in 2019. Of these, 9.6 million are children.
Biden’s signed package includes stimulus checks of $ 1,400 for individuals earning less than $ 80,000 and couples earning $ 160,000 or less annually, additional unemployment payments of $ 300 a week extended through September 6, and a cash injection for the state and local governments.
Through the expanded child tax credit, the federal government will send regular payments totaling up to $ 3,600 per year for each child under age 6 and $ 3,000 for each child ages 6 to 17. Single parents earning up to $ 75,000 and couples earning up to $ 150,000 per year are eligible, covering more than 60% of California households with children.
For the “Golden State” these numbers mean the possibility of reducing its child poverty rate in half, from 17.4% to 8.7%, according to researchers from the Center for Poverty and Social Policy at Columbia University.
An estimated 7.9 million California children would benefit from the credit expansion, but it would help lift 4 million of them out of poverty. The legislation aims for payments to be made monthly and begin this summer, but currently, the measure lasts only one year.
“This is the biggest individual action to reduce poverty that has been taken in a long time,” says Elaine Maag. “I don’t think we should see [the child credit and fiscal stimulus] that will solve a problem beyond aid; there will be many low-income people who even with this help will not be enough to get out [of poverty] ”.
“A change of course”
Congressman Raja Krishnamoorthi (D-Illinois) stated that it is fair to say that the Biden Administration’s economic package “is a turnaround that will help our economy recover and, of course, help the United States recover from the health crisis and I think it’s a great victory for the American people and the vast majority of whom are going to receive stimulus checks. “
Krishnamoorthi said that 11 million people will have their unemployment insurance extended, businesses, including restaurants have new subsidy programs so they can survive, schools will be able to reopen safely, there is a lot of money for vaccines and tests, but also for housing assistance, nutritional assistance and, finally, one of the large components that he helped spearhead through the Congressional Oversight and Reform Committee: state aid and local governments for an entire year.
Indeed, in addition to municipal and school district aid and direct stimulus checks of $ 1,400 for individuals, the American Rescue Plan Act also provides $ 26 billion for emergency rental assistance, $ 10 billion to help homeowners make mortgage payments, property taxes, property insurance and other payments related to housing; $ 5 billion to help low-income Americans pay utility bills and $ 4.75 million to help the homeless.
“We’ve made great progress helping states and local governments for basically a couple of reasons: Revenues from sales taxes and other sources of tax revenue have dropped dramatically for many states and local governments, and second, the governments are faced with one of two options: higher taxes or cut services or potentially do both, ”said the Hindu-American lawmaker.
Neither option was acceptable during the pandemic.
However, due to inaction at the federal level during the administration of former President Donald Trump, 1.4 million government workers were laid off, including the first responders needed to fight COVID-19, so the legislation addressed the reality.
that many state and local governments need additional revenue to fill many gaps.
“We had to keep taxpayers from having to deal with tax increases or cuts and services,” Krishnamoorthi said.
“A flawed miracle”
Chad Stone, chief economist at the Center for Budget and Policy Priorities (CBPP) noted that the American Rescue Plan Act addresses three essential issues: controlling the virus so that the economy and life, in general, can operate more safely; second, they address relief from the substantial hardships and uncertainties that millions of Americans have endured over the past year that would get even worse without the measures just enacted.
“These difficulties have been particularly acute among Blacks, Latinos, Native Americans, and immigrants, and households with children have also been particularly affected,” Stone said. “And third, the following benefit provides a substantial stimulus for an economic recovery that was frankly stalled halfway back to full employment.”
CBPP analyzes that the American Rescue Plan Act will provide needed help to tens of millions of people, reduce high levels of hardship, help school districts address student learning loss, and strengthen the economy.
However, he acknowledges that the economy remains weak, the recovery in employment has lost momentum and there are 9.5 million fewer jobs than in February 2020.
Unemployment for African Americans and Latinos is 9.9% and 8.5%, respectively, well above the unemployment rate for whites of 5.6 percent, which in turn is a very high percentage.
“So resorting to the size of the unemployment insurance expansion on unemployment benefits during the pandemic has been what I call a flawed miracle, a miracle because it has been so substantial and until this bipartisan package failed because it is temporary, already three times we faced a cliff of expiration ”.
In the summer, all programs would end abruptly if it is not renewed, so the rescue plan is extended to September 6 ”.
Unemployment insurance programs are additional weeks of benefits for people who exhaust their regular state benefits, the so-called Unemployment Compensation Pandemic Emergency Pandemic Program.
According to experts, the US economy will not return to its maximum potential until 2025, according to projections from the Congressional Budget Office; the number of people employed will not return to pre-pandemic levels until 2024 and unemployment will not fall below 4% until 2026.
