Child tax credit: Advocates propose new way to extend monthly payments for parents
When Congress passed the US bailout last spring, the maximum Child Tax Credit (CTC) amount was temporarily increased through the end of 2021. Parents also had the option of receiving the credit under form of monthly installments instead of a lump sum during tax season. . As a result, millions of families received up to $300 per child each month between July and December 2021.
But this legislation has not been renewed in 2022, meaning eligible households have not received CTC payments this year so far. The Center on Budget and Policy Priorities (CBPP) has previously indicated that making the expanded CLC permanent would reduce child poverty, but lawmakers have yet to pursue the expansion of the credit.
To make up for the lack of federal benefits, CBPP Policy Analysts urge state governments to create their own child tax credits. They said state-funded CTCs can effectively “target tax cuts at the people and communities who could use the aid the most”.
Keep reading to find out which states already have child tax credits in place, as well as how to manage your finances if you don’t qualify for the CTC expansion. One method is to consolidate higher interest rate debt into a fixed rate personal loan. You can learn more about debt consolidation on Credible.
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When federal benefits expire, some states offer their own child tax credits
The expanded federal child tax credit — including monthly CTC payments — expired at the end of 2021. As the CBPP urges state legislatures to implement their own CTC extensions, nine states l have already done. You can see which states have child tax credits on the map below:
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CTC eligibility requirements vary by state – for example, California Tax credit for young children is available to working families who have a child under the age of 6 and are eligible for the state Earned Income Tax Credit (EITC). Massachusetts Tax credit for household dependents is accessible to dependent elderly and disabled people, as well as to children.
Lawmakers in some other states, including Michigan and Oregon, recently introduced legislation to create a new child tax credit. Moreover, the New York State Legislature recently increased funding for the Empire State Child Tax Credit program, which was established in 2006.
Yet taxpayers in the vast majority of states do not have access to these CTC benefits.
If you’re looking for ways to reduce your expenses after federal CTC payments expire, you may want to consider credit card consolidation. Paying off revolving credit card balances with a personal loan can save some borrowers thousands of dollars in interest charges over time. You can visit Credible to compare personal loan rates for free without affecting your credit score.
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State CTCs can reduce child poverty and boost local economies
CBPP research shows that improved child tax credits can help eligible families meet basic needs like groceries, utilities and rent while lifting millions of American children out of poverty. Cash grants “like the CTC” are also associated with improved child development and school performance.
Not only can tax credits give low-income families the financial tools they need to provide for their children, but more money in parents’ pockets often translates into greater participation in local economies. and state. Additionally, CBPP policy analysts have stated that funding expenditures for CTC programs are relatively insignificant in a state’s budget.
“The costs of enacting or improving existing credits are also generally low enough that states can absorb them without generating additional revenue,” the authors wrote.
However, these tax credits only benefit households in certain areas of the United States. Families who live in states without CTC programs may need to look for other ways to cut expenses, such as consolidating debt into a fixed-rate personal loan. You can compare interest rates in the table below and visit Credible to learn more about debt consolidation.
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