Since the start of 2021, there’s been a fair amount of pandemic-related relief to go around. Not only was there a round of $1,400 stimulus checks that started going out in March, but parents have been seeing payments hit their bank accounts thanks to the newly expanded Child Tax Credit. And now, lawmakers are looking to give families with children even more relief.
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Several lifelines for families
The Senate Budget Committee recently released its $3.5 trillion budget that calls for Senate committees to invest in helping families reach financial security. Some of the benefits included in that proposal are:
- A continuation of the expanded Child Tax Credit
- Free pre-K programs for three- and four-year-olds
- Expanded paid family and medical leave
Continuing the expanded Child Tax Credit would be huge for families. Right now, the enhanced credit is only set to apply to the current year, though lawmakers have been fighting to extend it.
The former version of the credit saw families collecting up to $2,000 per child under the age of 17, of which $1,400 was refundable. That credit was also payable as a single lump sum in the form of a tax refund.
This year, the credit looks very different in that it:
- Is worth up to $3,600 for children under age 6
- Is worth up to $3,000 for children aged 6 through 17
- Is worth up to $500 for children aged 18, as well as full-time students aged 19 to 24 who are claimed as dependents
- Is fully refundable so that families with no tax liability get all of that money paid to them
- Is being partially paid in installments as well as a lump sum
That last part is significant. Families who collect the Child Tax Credit in tax refund form often find themselves squeezed for cash during the year. Now, eligible families are getting half of the expanded Child Tax Credit in monthly payments from July through December, and they’ll only need to wait until 2022 to get half of the money they’re owed under it.
Keeping the boosted Child Tax Credit in place could work wonders for low-income families in particular. Researchers at Columbia University’s Center on Poverty and Social Policy said earlier this year that the expanded credit could reduce the child poverty rate in the country by 45%, taking it from around 14% down to 7.5%.
Meanwhile, free universal pre-K could be a huge boon to families that struggle to cover the cost of childcare. In 2020, the cost of putting a young child into a childcare center averaged $340 a week, according to Care.com. For minimum-wage earners working 40 hours a week, that expense alone would wipe out their earnings. Offering up universal pre-K could alleviate that burden the same way public schools serve as childcare for older children who are kindergarten aged or older.
All told, families could be in line for a world of financial relief if the aforementioned proposal goes through. And while the proposal, in its current form, is only a blueprint for Senate committees to follow, it’s loaded with a host of promising provisions that could serve a lot of American families very well.
View more information: https://www.fool.com/the-ascent/personal-finance/articles/families-with-children-could-get-a-windfall-if-democrats-35-trillion-budget-goes-through/