Since July 2016, nearly 36 million families began receiving advanced child tax credits to help with financial struggles, reduced income, and poverty during the pandemic. Now, as the Build Back Better legislation, which would extend the enhanced CTC, sits in debate in Congress, a study reveals that close to 10 million children could fall back into poverty if the CTC is not extended.
The Center on Budget and Policy Priorities noted that, if the enhanced CTC is not extended past this December, 27 million children will receive less funding in the future – and in some cases, nothing at all. The CBPP report shared that roughly 9.9 million children could fall back to the poverty level without the enhanced, advance credit.
A separate study from Columbia University found that the credit has already reduced child poverty by 25%. If the credit continues through 2022, as outlined in the Build Back Better legislation, it could reduce child poverty by more than 40%, CNBC.com reports.
The credit currently delivers payments of $250 per child between the ages of 6 and 17 into parents’ or legal guardians’ bank accounts monthly. Americans can claim the remainder of their credit, up to $3,000 per child for the year, on their 2021 taxes. For children under 6, the amount rises to $300 per child, maxing out at $3,600 per child.
If the provision does not remain in the Build Back Better bill, the credit would drop to $1,000 per school-aged child and $1,600 per child under 6. Additionally, advance tax credits would disappear and the CTC would be filed as a fully refundable tax credit on federal taxes. Perhaps most significantly, families who fall under the income threshold to file taxes – or who have no income to report – would lose the credit entirely.
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