For more than two decades, the Child Tax Credit has helped parents manage the large cost associated with raising children. However, with the costs associated with raising children growing every year (rent, daycare, groceries, etc.) and now the recent COVID-19 pandemic, Democrats want to expand the current tax credit to be more generous.
Expanding the Child Tax Credit for American Families
Over the past 24 years, parents could file a Child Tax Credit for up to $2,000. However, the new credit would allow parents to receive up to $3,600 for children six and younger or $3,000 for children up to age 17.
The new credit would also change up how parents receive the benefit. Up until now, parents would claim the credit when they filed their tax returns in April. However, now, parents could opt to receive monthly payouts throughout the year.
Lifting Families Out of Poverty
Currently, it’s believed that the existing Child Tax Credit helps lift roughly 5.5 million children out of poverty each year, according to Chuck Marr, senior director of federal tax policy at the Center on Budget and Policy Priorities. However, this new plan would bring an additional 4 million children out of poverty.
And with COVID-19 continuing to affect millions of families across the country, the ability to receive monthly checks, rather than one lump sum, can help families maintain better financial stability.
Do I Qualify for the Expanded Child Tax Credit?
Not everyone who has children will qualify for the new credit. With the benefit being designed to predominantly help low and middle-income parents, it’s aimed at married couples earning less than $150,000 a year or single parents earning less than $75,000.
Biden’s proposal is currently expected to last for just one year, however some Democrats believe it should become a permanent credit.
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