Despite the lowest unemployment rate since the early days of the pandemic, there are still millions of Americans living a hand-to-mouth existence. The benefits many have depended on to feed their families and keep a roof over their heads are about to expire, and some are rightfully worried.
Fortunately, half the Child Tax Credit normally claimed at tax time is being sent early this year, deposited in monthly increments into bank accounts across the country. What’s more, in response to COVID-19, Democrats in Congress increased the total credit from $2,000 to $3,000 per child over the age of six and from $2,000 to $3,600 for children under six. They’ve also raised the age limit for eligible dependents from 16 to 17.
Since the monthly deposits will amount to half the total credit by the end of 2021, the other half can be claimed when taxes are filed in 2022.
Here are three reasons the Child Tax Credit could not have come at a better time.
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1. Unemployment benefits are ending
Three benefit programs for the unemployed will expire in less than a month, dealing a blow to an estimated 7.2 million people. The 3.6 million Americans set to lose all or part of their unemployment benefits the first week of September join 3.6 million who lost benefits early when leaders of Republican-led states terminated the federal $300 boost to state unemployment prematurely.
Also ending is the Pandemic Unemployment Assistance program, designed to help gig workers, freelancers, and self-employed people impacted by the pandemic.
Finally, the Pandemic Emergency Unemployment Compensation program, created to extend how long unemployed Americans can receive standard state benefits, is also on its way out. Most states provide 26 weeks’ worth of benefits, while others offer as few as 14. That means that millions who manage to hold on to some benefits in September will be on the clock, with a specific set number of weeks left to collect.
The monthly Child Tax Credit deposit could help fill the gap of reduced unemployment benefits.
2. Enhanced food stamp benefits are ending
No one is living large because they receive enhanced food stamp benefits. The enhancement for participants of the Supplemental Nutritional Program (SNAP) is only 15% of their typical food stamp benefits. That means that a family receiving $300 per month in food stamps before the pandemic saw their benefit increase by $45 per month.
If losing 15% of SNAP benefits does not seem like a big deal, consider this: According to the Urban Institute, the maximum benefit in 2020 did not cover the cost of meals in 96% of counties. The average meal costs $2.41. The average SNAP benefit per meal is $1.97. As inflation causes food prices to rise, putting a meal together using SNAP benefits has become increasingly difficult. Add to that job loss and the high cost of childcare for those who want to return to work, and you have a recipe for hunger.
The Child Tax Credit may help families struggling to put food on the table get through another month.
3. Federal eviction moratorium is ending
The ban on evictions for nonpayment of rent was set to expire on July 31, although last week, the Centers for Disease Control and Prevention (CDC) ordered a 60-day extension. That means that anyone having trouble paying their rent has until Oct. 3 to catch up on payments. However, to be eligible for the moratorium, a renter must meet all six of these conditions:
- Earn an annual income of $99,000 or less if single or $198,000 or less if filing jointly.
- Be able to demonstrate an attempt to obtain government assistance for housing.
- Have lost income or are dealing with heavy medical expenses.
- Attempt to make at least partial rent payments.
- Have evidence that an eviction would make them homeless or force them to move into a shared living space.
- Reside in a county with a high level of COVID-19.
For someone concerned about losing the roof over their head, the Child Tax Credit may help make at least a partial rent payment.
With only 50.4% of U.S. adults fully vaccinated (as of Aug. 12), there is also the genuine concern that businesses may begin to shutter again as rates of infection and hospitalizations knock out a segment of the workforce. New COVID cases are up by nearly 90% as of late this week, painting a picture of more challenging times ahead.
For those among us teetering on the edge of a financial cliff, the Child Tax Credit could not have arrived at a better time.
View more information: https://www.fool.com/the-ascent/personal-finance/articles/stimulus-update-3-reasons-the-child-tax-credit-could-not-have-come-at-a-better-time/