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Stimulus Package Latest: Parents Could Receive Monthly Payments With Expanded Child Tax Credit

(CBS Detroit) — Raising a child may soon get a little less expensive. Recent reports suggest that Democrats are drafting legislation to expand the child tax credit from $2,000 to $3,000 or $3,600, depending on the child’s age and the family’s income. Qualifying parents wouldn’t have to wait for their tax refunds to see that money. Payments would be issued on a monthly basis. Such a change to the child tax credit will likely be tied to discussions over the proposed $1.9 trillion stimulus bill, and is far from a sure thing.

>>READ: Stimulus Check Update: When Could The Third Payment Arrive?

According to a Biden administration plan that’s coming into focus, the IRS would pay out $300 per month for each child up to five years old and $250 per month for each child ages six through 17. That adds up to $3,600 or $3,000 per year, depending on a child’s age. Payments would be issued automatically in a similar fashion to the first stimulus checks, and would not be dependent on the recipient’s current tax burden. In other words, qualifying families would receive the full amount. Payments would phase out beyond a yet-to-be-determined income threshold. Recipients may also have the option to receive payments annually rather than monthly.

The credit would be fully available to families accounting for 27 million children, according to the Center on Budget and Policy Priorities. That covers approximately half of all Black and Latino children, whose families have been hit particularly hard by the economic fallout from the COVID pandemic. Anywhere from eight to 12 million children currently live in households facing food insecurity due to lack of money, according to recent Census data. Estimates suggest that expanding the child tax credit would push 9.9 million children beyond or closer to the poverty line.

>>READ: Stimulus Check Update: ‘I Believe We Have A Moral Obligation,’ Says President-Elect Joe Biden

The proposed plan would only last one year. The thinking is that political pressure from supporters of a widely popular program would force Congress to extend it in the years to come. But even a single year of payouts is likely to face significant pushback from Republicans, many of whom balked at the cost of proposed stimulus packages over the last year and seem likely to do the same with Biden’s American Rescue Plan. Broad support exists among Democrats, however.

The current child tax credit delivers some relief to parents and guardians. It can reduce one’s taxes by up to $2,000 per child per year. The child must be a U.S. citizen living under the same roof, 16 years old or younger, and claimed as a dependent, among other criteria. The credit begins to phase out once the filer’s annual income surpasses $200,000 ($400,000 for a married couple filing jointly). The only way to claim it is by filing taxes. But any additional refund above a filer’s tax burden is lost, unless they qualify for the Additional Child Tax Credit. And even that is capped at $1,400.

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The current system has many issues which make it less than ideal for many people raising children, especially those who need it most. The residency requirements are complicated and out of step with the structure of many modern American families. Children often live with other family members, for example, or shuttle between the homes of separated parents. Dependent children age 17 or older don’t qualify (though they may qualify for the dependent care credit). Payments are issued as tax refunds. So those who don’t file taxes or earn enough to qualify for the full credit — often among the poorest workers — miss out on all or some of the benefit.

Source: CBS Chicago | News Colony

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