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Millions of Children May Be Lifted Out of Poverty if the Child Tax Credit Was Increased | Latest Update!

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Since December, millions more American children have been poor. According to new data from Columbia University’s Center on Poverty and Social Policy, 3.4 million more children were poor in February 2022 than in December.

From July to December 2021, the monthly child tax credit payments reduced child poverty by 40%. The second half of the enhanced tax credit will be refunded to families this year. Then the credit reverts to $2,000 per child, nonrefundable.

Former Vice President Joe Biden has asked Congress to continue the payments “so no one has to raise a family in poverty.” The White House has provided data illustrating the child tax credit’s impact on American families by state. To help individual families and businesses, the Biden administration says expanding credit would be beneficial to both.

Another new NBER analysis finds that the benefits of a larger child tax credit exceed the costs. The increased programme would cost $97 billion and provide $982 billion in social benefits.

Continue reading to learn how an increased ‘Child Tax Credit’  may affect you and your family. Find out how to file your taxes for free and whether you have to repay overpaid child tax credits.

It Could Help Millions of Kids

According to Columbia University research, 3.7 million more children were poor after the child tax credit ended in December. According to the latest Columbia data, the percentage of children living in poverty fell from 17% to 16.7% in February.

The February percentage is still up from December’s 12.1%.

According to Elaine Maag, principal research associate at the Urban Institute, one in seven children is poor. That’s nearly 13 million kids.

According to Maag, extending the enhanced child tax credit payments and making them completely refundable will reduce child poverty by 40%.

The extra cash may assist counteract inflation.

Read More: Don’t Throw Your Money Away: Tax Credits That Aren’t Often Mentioned
In February, inflation rose 7.9% year-on-year, just as the monthly child tax benefit scheme expired.

The price rises on groceries and gas might be frightening for families who used to receive up to $300 per child every month.

Those families would be less stressed if the child tax credit was extended, Maag says. Price hikes won’t affect them as much if they’re better off.

If it isn’t extended, those families may go hungry and struggle to pay rent and utilities.

 

Child Tax Credit

 

It May Increase Jobs

Many families cannot afford child care, so one parent stays home to care for the kids. That extra monthly income may allow parents to afford a babysitter or childcare centre so both can work. Maag predicts growth in employment across the US.

Alternatively, some secondary home earners may work less or not at all if they didn’t have to pay for child care.

What if the Payments Involve Work?

No job requirement was one of the reasons why the enhanced child tax credit wasn’t extended last year. Senator Joe Manchin, a West Virginia Democrat, wants parents to only be eligible if they work and pay taxes. His vote is vital because the Senate is evenly divided on the program’s renewal.

But an employment requirement excludes many needy families.

Those unable to work owing to child care costs, for example, would not be eligible for the credit. Also, parents who leave their jobs forfeit credit money.

According to Maag, the child tax credit is more likely to help parents return to work if there is no employment requirement.

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Read More: In March 2022, the First COLA Checks Will Be Sent Out to Social Security Recipients | Latest Update!
A child tax credit extension might help millions of kids.

How is May Limiting Child Care Costs to 7% of Income Help?

He told Congress that lowering child care costs might help raise working parents’ standards of living. In his opinion, parents shouldn’t have to pay more than 7% of their income for child care.

Parents may spend more money on other necessities if the child care fee was reduced to 7%. Maag predicted that child care costs will rise, but not dramatically.

Many parents can’t work right now because they can’t afford proper child care, and some rely on unreliable neighbours and family members. Cheaper child care would help parents financially.

CHILD TAX

Will Extending the Credit Cost the Taxpayers More?

In the short term, it will cost more, but it is an investment, Maag says. Why? Children living in poverty have poorer health outcomes due to inadequate nutrition. They also have inferior educational outcomes and are less likely to complete college. Children raised in such conditions have a lower probability of acquiring a good-paying job in the future.

In the long run, not delivering those benefits to needy families costs more, Maag said.

What’s Up With the Extension?

The American Rescue Plan of 2021 increased the child tax credit for most American families to $3,600 for children under 6 and $3,000 for children aged 6 to 17. Monthly advance payments were also created. There’s no sign yet that the child tax credit will be increased for 2022.

Biden’s Build Back Better plan, which included a child tax credit extension, is dead. But Biden wants Congress to approve components of the economic plan, such as the expanded payments.

Some senators want to pass a bill without a labour requirement. But Manchin’s support is required to extend the credit in the Senate.

Here’s how the child tax credit affects your taxes.  You’ll also need it to obtain the rest of your child tax credit.

Als0 Read: Do You Have a Financial Advantage When It Comes to Social Security and Medicare?

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