Stimulus Update: Child Tax Credit Extension Likely To Diminish As Dems Revise $3.5 Trillion Budget Bill
The good news is that even a government shutdown won’t stop Child Tax Credit checks through December 2021. More good news for many struggling American families: The CTC is very likely to be extended into 2022. However, the credit could now see significant changes that affect very-low-income families in households where the parents do not work, as well as those in upper income brackets who could see the credit phased out at lower income thresholds than where they are currently.
Stimulus Update: Petition for a Fourth Stimulus, State Economic Boosts, Golden State Checks & Child Tax Credits
Government Shutdown 2021: Will SNAP Benefits Be Impacted?
Washington Democrats are currently debating how long the CTC extension should last and how much parents should receive based on their income levels. Moderate lawmakers are calling for a budget reconciliation bill that costs less than the $3.5 trillion proposed by many Democrats, the Wall Street Journal reported.
To reduce the bill’s total cost, Senator Joe Manchin is calling for a work requirement for parents to receive the credit. In an interview with CNN in early September, Manchin said, “Don’t you think, if we’re going to help the children, that the people should make some effort?”
The WSJ claimed that sources familiar with Manchin’s views said he believes the benefit fuels opioid use and does not address the deeper problems within families. Representative Kevin Brady echoed a similar sentiment, saying, “Addressing poverty successfully isn’t just sending them a check. There is usually more going on in a family than that.”
Manchin’s support is needed to pass the bill in the evenly divided Senate. The bill also includes Medicare expansion, tax increases and a national paid-leave program.
To help pay for additional families who would receive the child tax credit even if they aren’t working under the new bill, some Democrats are proposing to lower the income cutoffs on the upper end. Currently, married couples making less than $150,000 receive the full credit of $3,000 per child ages 6 and up, and $3,600 for children under six. After that, it phases out to $2,000 per child for households making up to $400,000. Some Democrats have proposed reducing that cutoff below the $400,000 mark. However, President Joe Biden has said he doesn’t want to raise taxes on families making less than $400,000. Another option would be to eliminate the phase-out, and instead cutting off the credit completely at the $400,000 mark.
Other options would include shrinking the total cost by expiring the expanded CTC in December 2024 instead of 2025. In addition to the parameters of the refund and income thresholds, Congress is also debating how long the credit should remain fully refundable, which means you can receive the credit even if the amount exceeds the taxes you owe. More will become clear as discussions on how to lower the total cost of the bill forge ahead.
More From GOBankingRates
- 5 Things Most Americans Don’t Know About Social Security
- 10 Reasons You Should Claim Social Security Early
- Social Security Benefits Might Get Cut Early — What Does It Mean for You?
- When Social Security Runs Out: What the Program Will Look Like in 2035
Last updated: September 29, 2021