Last year, when the unemployment rate was high and there was a shortage of COVID-19 vaccines, politicians were fast to distribute stimulus funding.
Along with a batch of $1,400 stimulus cheques, the Kid Tax Credit received a substantial boost in 2021, increasing its maximum value from $2,000 per child to $3,600.
Importantly, from July through December, payments for half the credit were made every month. This indicated that some households were qualified for as much as $300 per month for each child.
But neither a stimulus check approval nor a monthly Child Tax Credit payment has occurred this year. The maximum amount of the Child Tax Credit has really been restored to $2,000 this year. And that has made things extremely difficult for many families.
Although the U.S. economy has been rather robust in terms of jobs, inflation has also been widespread and gas costs have increased. This has put a lot of strain on families, particularly those who used all their money earlier in the pandemic.
The improved Child Tax Credit may be replaced by a new idea being put forth by Republican lawmakers. Many families may experience significant relief if it is approved.
Will they be given a lifeline?
More financial security for parents is intended by the Family Security Act 2.0, which was recently sponsored by a group of Republican lawmakers.
Families would be qualified for a $350 monthly stipend per kid up to age 5 under the idea, for a total of $4,200 annually.
Also available to families would be a $250 monthly payment for each child between the ages of 6 and 17, for a total yearly payment of $3,000 per family.
Up to six children per household would be eligible for these subsidies. Furthermore, they are more lenient than what the increased Child Tax Credit permitted for the previous year.
But there’s a problem. Families must have $10,000 in documented annual income on file to receive those benefits in full. Payments would be scaled back for those making less money.
Income limitations are also included in the proposal. If a single parent earns $200,000 or more, as well as if a married couple files jointly and earns $400,000 or more, the aforementioned payments will gradually stop.
This current proposal differs from previous ones in that parents would be qualified to begin receiving monthly payments while their infants are still in the womb.
In particular, it permits the start of payments four months ahead of a child’s due date.
The cost of maintaining the expanded Child Tax Credit for 2022 was a major factor. The question of where the money for this additional benefit will come from is so raised.
The solution might not be appealing to many. Cuts to the Earned Income Tax Credit (EITC), a credit that benefits households with low and moderate incomes are being proposed by the legislators who are advocating for this new tax credit.
The EITC does not require having children, unlike the Child Tax Credit, however having dependents might affect eligibility and increase income.
Furthermore, cutting the EITC could be detrimental to many families without children who are unable to make up the lost income through payments made by the Family Security Act 2.0.
Additionally, the proposal proposes doing away with the SALT deduction, which stands for state and local tax. Many taxpayers nationwide could suffer as a result.
Will the request be approved? Despite having good intentions, the Family Security Act 2.0 does have significant shortcomings.
Even if they do have children and qualify for monthly payments, several experts caution that eliminating the EITC could worsen financial circumstances for many families.
As a result, there can be opposition to the initiative. However, just the attempt by lawmakers to provide parents access to money is a positive thing.
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