Tax Credit Provides Boost to Families With Children Starting Next Week

by Ashley Archibald

Millions of families with children in the United States will see a boost to their bank accounts starting next week as the federal government begins to send out money meant to help them with the cost of raising children.

The cash comes from an enhancement to the Child Tax Credit (CTC), which increases the amount of money that some families with children receive by more than $1000 per child. It was part of the American Rescue Plan Act (ARPA), which President Joe Biden signed into law on March 11.

ARPA changed the CTC in several key ways. First, it increased the amount per child under 6 years old from $2,000 to $3,600. For kids 6 years old and above, the credit increased from $2,000 to $3,000. It also expanded the age of eligibility from 16 to 17.

The legislation splits the CTC Payment into monthly installments for the rest of 2021. The extra money continues when families file their 2021 taxes. Finally, the tax credit is fully refundable, meaning payments will be made regardless of tax liability.

Unintuitively, the poorest families didn't previously qualify for the entire $2,000 tax credit, meaning that the credit ended up benefiting families who made more money and so paid more in tax. The enhanced benefits are available to joint filers with a household income up to $150,000 per year, head-of-household filers making up to $112,500 per year, and "other filers" making up to $75,000 in annual income.

At an event to increase awareness of the coming credit, Congresswoman Suzan DelBene (D-Medina) said that the enhanced benefits will reach 1.4 million children in Washington State alone, including 642,000 Children of Color.

"The Child Tax Credit has existed for many years, but one-third of kids were left behind because their parents didn't make enough money to receive the full tax credit, because it was offsetting their taxes," DelBene told the Emerald. "That never made sense. It was so important that we got it to the folks who needed it most."

A March analysis from the Center for Budget and Policy Priorities (CBPP) found that the changes would extend the CTC to 27 million more children and get 9.9 million children above or closer to the federal poverty line.

The additional benefits will be a help to local families, but people who hear about the program can be wary, said Shereese Rhodes, a fellow with MomsRising, which advocates for women, mothers, and families. Some are concerned about consequences down the road from accepting monetary help from the government.

"There's still, in my community, so much mistrust with the government," Rhodes told the Emerald. "They feel like 'they're not going to give me something for nothing, right, and when it comes back, am I going to be able to absorb that hit?'"

That makes getting the news about the credit from a trusted community member very important, because people have been burned by government programs before.

"A lot of the time, I feel like there's some secret handshake — some honeycomb hideout password I have to say, and in a lot of places they gatekeep," Rhodes said. "I get my information from my community … If I trust that person in community, I'm most likely going to utilize that source."

There will also be flyers in multiple languages and groups will work with state agencies such as the Department for Social and Human Services to get information out to their clients, said Marcy Bowers, executive director of the Statewide Poverty Action Network.

Eligible households who filed taxes in 2019 or 2020 won't have to take any steps to receive the credit because it flows through the Internal Revenue Service (IRS). Those who didn't file in those years can visit childtaxcredit.gov for more information on how to get the benefit.

The expansion of benefits under the CTC are set to expire in a year. That means that the CTC would revert back to its pre-ARPA form: no additional money and very low-income families would no longer qualify for the whole amount.

DelBene and others in Congress want to make the enhanced CTC permanent and have for years.

The American Family Act — distinct from Biden's American Families Plan — has been introduced in the House of Representatives and the Senate for at least two Congressional sessions and has included the enhanced CTC, which ultimately made it into ARPA.

Democrats have a thin majority in each chamber and a seemingly willing partner in Biden whose American Family Plan includes the enhanced CTC.

But unless Senate Democrats can hold a united front and pass a bill through the reconciliation process — a procedure that allows the passage of budget-related bills on a simple majority — they will have to find 10 willing Republicans to vote with them on a bill that includes the provision.

Pushing for a permanent change in the CTC is the best move for families, DelBene said.

"Kids don't grow up in a year or five years, so we need to make sure they know it's going to be there for them throughout their child's life and people who are starting families know that it will be available to them as well," DelBene said.

Ashley Archibald is the editor of Real Change News and a freelance journalist with previous work in the Santa Monica Daily Press and the Union Democrat. Her work focuses on policy and economic development, and you can find it in the South Seattle Emerald, KNKX, and the Urbanist.

Featured image by Susan Fried.