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What does the revised credit mean for my family? – CBS New York

(((CBS Miami) — The revised child tax credit is about to take effect. Starting July 15th, most parents will receive a monthly payment of up to $ 300 per child, courtesy of the American Rescue Plan. That extra money can actually be summed up, especially for families at the bottom of their income range. It may even be the difference between eating and not eating, or paying and not paying.

According to the Biden administration, the enhanced child tax deduction is available to approximately 39 million households and accounts for 65 million children. It covers about 88 percent of the country’s children. According to the report, about 13% of households with children faced food insecurity due to lack of money. Census data According to the same data, about 21 percent of rental households with children were delinquent in rent. Initial estimate The Center on Budget and Policy Priorities suggests that increasing child tax credits would cause 4.1 million children to cross the poverty line.

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How much do you get?

For parents of children up to the age of 5, the IRS pays $ 3,600 per child, half for 6 months and half for the 2021 tax credit. That’s $ 300 a month and $ 1,800 at tax. The amount will change to a total of $ 3,000 per child between the ages of 6 and 17 or $ 250 per month and $ 1,500 at tax. The IRS pays a $ 500 lump sum payment to dependents aged 18 or full-time college students up to the age of 24.

Payments will be made based on the Adjusted Total Income (AGI) reflected in the parent or parent’s 2020 tax return. (AGI is the sum of wages, interest, dividends, dependent allowances, severance pay distributions, and other sources of income minus certain deductions such as student loan interest, dependent allowance payments, and severance pay. )Amount of money Phased abolition Over $ 75,000 for individuals and over $ 150,000 for couples at a rate of $ 50 for every $ 1,000 in annual income. Benefits will be fully refunded. That is, it does not depend on the recipient’s current tax burden. Eligible families receive the full amount regardless of their tax obligations. There is no limit to the number of dependents you can apply for.

“It’s much more generous,” said Stephen Nunez, a senior researcher on the guaranteed income of the Jain Family Institute, an applied research organization in the social sciences. (Nunez is studying cash welfare policies, including fieldwork to answer policy-related questions about social safety nets.) “It’s fully refunded and there are no more labor requirements. That is, the poorest households, nothing. That’s especially important for non-earning households, or households with taxable income of less than $ 2,500 a year. There are some simulations, and some analysis of this particular plan is just these changes in the United States. It suggests that it is enough to reduce the poverty rate of children by about 40%. “

“So it really has a huge impact on child poverty in the United States,” Nunez continues. “And this is consistent with what is happening in other countries that have introduced something like children’s allowances. Therefore, this kind of policy is implemented and managed in different ways in different countries, but it is fairly common. It exists in Canada and in the United Kingdom, Germany, and elsewhere in the world. And in those places, it produced very similar results, reducing child poverty by one-third or fifty percent compared to baseline. “

What does it do for the family?

Food and shelters are an obvious way to use additional child tax credit money, but there are many ways it can help in raising and caring for your child. Parents can get in and out of work and childcare while they work for an additional $ 250 or $ 300 per month. In other words, it may make it possible to have a job.

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Many families are one unexpectedly large expense away from financial ruin. And the term “heavy expense” is relative based on income. So, spending hundreds of dollars a month extra allows parents to fund a kind of rainy day in case life hits unexpectedly.

Unemployment can have a devastating impact on households. Loss of government-provided unemployment benefits in the absence of work can be confusing as well.Almost half of American households Get unemployed Including children.What appears to be a coincidence of timing, the updated child tax credit begins shortly after many states stop accepting. Federal Unemployment Bonus For their citizens. A total of 26 states are paying or discontinuing a weekly $ 300 allowance prior to the official Labor Day end date. The additional money from the child tax deduction offsets some of the money the unemployed lose.

Recent results Basic income experiment It provides even more clues about the benefits of paying these child tax credits. Stockton, California sends $ 500 a month to a group of families, below the median annual income of $ 46,000. The family mainly spent money on necessities such as food, bills and household items. Extra money can also reduce the volatility of income and reduce the stress of not knowing when and how much the next salary will arrive. It also had a positive effect on health, well-being and anxiety without discouraging work motivation.

“It’s good that we’re reducing poverty,” says YEBBA Nersisian, an associate professor of economics at Franklin & Marshall University. “And the fact that we were able to reduce it with a non-dramatic increase in tax credits-we could almost double that, but not so much in terms of the dollar-so I The fact that we were able to do it and early we didn’t do it, I think it’s a bit ridiculous, but it’s also the way we think about poverty, namely Poverty lineWhere did you put it (a family of four earns $ 26,500 a year) — it’s not realistic. “

“That’s why you can cross the poverty line by making a little more money,” Nersisian continues. “But that doesn’t necessarily mean you’re not poor in a more realistic sense.”

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It was first published on Wednesday, June 23, 2021 at 5:59 pm EST.

What does the revised credit mean for my family? – CBS New York

Source link What does the revised credit mean for my family? – CBS New York

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