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Young girl opening up refrigerator to find it mostly empty.
Last year, families with children got a lifeline in the form of the boosted Child Tax Credit. Prior to 2021, the credit’s maximum value was $2,000, and only part of that sum was refundable. In 2021, the maximum value of the Child Tax Credit increased to $3,600 for children under the age of 6 and $3,000 for those aged 6 to 17. The credit also changed to become fully refundable, so if a recipient owed no tax, they could still claim their money in full.
Just as importantly, half of 2021’s Child Tax Credit was paid to recipients in the form of monthly installments that hit bank accounts between July and December. Normally, the Child Tax Credit is only available as a single lump-sum payment that comes after filing a tax return. Those monthly payments helped a lot of families shore up their finances and keep up with bills at a time when living costs were rising.
President Biden had every intention of keeping the boosted Child Tax Credit in place for 2022. But the spending bill that allowed for that has stalled out in the Senate. As a result, no monthly installment payments have gone out so far this year, and many families are struggling as a result.
A reversal of progress
Last year, the boosted Child Tax Credit did a great job of pulling millions of children out of poverty. But now, close to 4 million more children are living in poverty due to the boosted credit having expired, according to a recent report by Columbia University’s Center on Poverty and Social Policy. Not shockingly, Latino and Black children were the most likely to fall into poverty this year in the absence of the boosted credit.
Meanwhile, the expiration of the expanded Child Tax Credit couldn’t have come at a worse time. Inflation has been rampant during the first few months of 2022, and many families are struggling to make ends meet due to higher gas, grocery, and utility costs, among other things. Losing those monthly installment payments is putting a lot of families in a position where they’re once again forced to consider skipping bills or skimping on essentials.
Things could get worse
Before the boosted Child Tax Credit actually expired, a report by the Center on Budget and Policy Priorities projected that nearly 10 million children would fall back into poverty without an extension. If lawmakers don’t find a way to bring back those monthly installment payments, we could see poverty levels among children explode in the coming months, especially if inflation continues to rear its ugly head.
Meanwhile, families that were entitled to the Child Tax Credit last year but never received any payments under it should be sure to file a tax return for 2021. At this point, that’s the only way to claim the credit and get access to that money. The tax-filing deadline is April 18, and there’s free tax help available for lower-income filers that could make the process of claiming the Child Tax Credit much easier on a whole.
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