Starting July 15, as a result of the enhanced child tax credit, U.S. parents who filed tax returns will automatically receive monthly payments of up to $300 per child and be able to claim at least another $1,500 per child on their 2021 tax return.
The enhanced child tax credit, which expanded on an annual tax credit totaling $2,000, has been included in the American Rescue Plan championed by President Joe Biden (D) and Democratic lawmakers.
Since last month, Biden administration officials have been promoting the much-anticipated funds that will be deposited into the accounts of millions of American parents.
For one District resident and mother, Daria-Ann Martineau, the additional funds could make the difference in how she provides for her young child.
“I’d have to decide where to put the money, but I can put it toward baby supplies, childcare, or a savings account for my daughter’s future,” said Martineau, a poet and creative writer who lives in Northeast.
“There are a few options I can think of — even diapers. We do pretty well but I don’t think it will make too much of a difference for every family living in D.C. which is an expensive place to live. It’s starting to feel like having children is a luxury in a place like this.”
The full tax credit can be claimed by couples filing jointly who make less than $150,000 annually or single tax filers making a maximum of $75,000. The offering has been phased out for jointly filing couples with incomes surpassing $190,000. However, they will still be able to claim the $2,000 tax credit.
Monday marked the deadline for parents to choose between monthly payments or the lump sum of $3,600. Tax experts say the amount that taxpayers opt in for advanced disbursements will ultimately determine how much tax credit they will be able to use when filing their 2021 taxes, or whether they will end up owing taxes.
Though she’s grateful for the child tax credit, local parent Crystal Herrera said she’s concerned about potential tax hurdles.
“My husband and I didn’t get hit too hard over the pandemic but there was a financial hit due to my husband losing hours at work,” Herrera said. “The child tax credit will definitely be helpful so that we can maintain and stay ahead. I’m just hoping there are no surprises that present themselves later.”
The Center on Budget and Policy Priorities said the benefits of extended child tax credit would far outweigh likely reductions in employment.
Studies connected by the organization predict a closing of the poverty gap between white and nonwhite children. It also predicted a significant reduction in the number of American children living below the poverty line, along with a 90 percent retention in employment among American parents.
Amid the negotiations for the multi-trillion dollar American Families Act, Biden has pushed for the permanent extension of the increased child tax credit. In recent weeks, liberal groups had been targeting elected officials for such an outcome, all as part of what’s been touted as the Fighting Chance for Families campaign.
Spending for the child tax credit, along with the infrastructure bill, would most likely be approved via reconciliation to circumvent Republican opposition in the Senate.
Meanwhile, Biden administration officials have continued their rallying cry behind the extended tax credit and other similarly-focused initiatives.
As Cedric Richmond, senior adviser to the president, told reporters in late June, these moves count as part of a puzzle to restore the U.S. economy.
“The truth of the matter is that our administrator is busy doing a lot of things at one time but we’re meeting the challenges in front of us and keeping the promises on the campaign trail,” said Richmond, also director of the Office of Public Engagement.
“If you look at the other things we’re doing in people’s lives [like] reducing child poverty and reducing African-American poverty, I couldn’t be more proud. I think our economic plan is working. We’re rebuilding this economy from the bottom up,” he said.