President Biden’s Build Back Better legislative program is nearing completion in Congress, but will it include another round of direct payments?
The Controversial Fourth Stimulus Check
Personal income increase up to $24.1 billion after the third stimulus check was given earlier this year. Since then, though, the value has declined, falling to $20.4 billion in September. Furthermore, the discontinuation of federal pandemic-related unemployment assistance programs was one of the key reasons for the drop. More than eight million workers in the United States departed their jobs when unemployment benefits expired, offering additional evidence that the benefits were not preventing individuals from returning to work.
Nearly 30% of persons in the United States were still having problems paying their regular household bills in October. Many people are expecting that Congress would enact another round of direct payments in December, as prices are rising across the economy and the Christmas season approaches.
However, Congress has no intentions to pass a fourth stimulus check, and universal direct payments are not included in the Build Back Better Act or the reconciliation package passed by the House of Representatives on Friday, November 19. However, if passed by the Senate, the plan would continue the present Child Tax Credit system for another year.
The Increase of the Child Tax Credit Gives Direct Payments to Children
The American Rescue Plan makes changes to the value and distribution of the Child Tax Credit. These changes made 24 million children eligible, and the Internal Revenue Service began delivering monthly payments in July.
Each child under the age of six receives $300, while those aged six to seventeen get $250. In 2021, the last payment will be issued on December 15, with the remaining half of the credit being paid when households submit their taxes in the spring.
Initial payments, which began in July, have helped to bring 3 million youngsters out of poverty, according to studies. However, it is doubtful that the lofty goal of a 40% reduction in child poverty by 2025 will be realized, and Congress is battling to win a renewal.
However, it appears that the payments are assisting. “The great majority of low-income parents are spending their Child Tax Credit payments on basic needs such as food, housing, utility bills, and education, which may help give their children a stronger start in life,” according to the Center on Budget and Policy Priorities.
Is There a Chance that the Child Tax Credit will be extended?
Even though the extension is just for a year, rather than the White House’s four-year goal, the amendment to make the tax provision fully refundable seems to be permanent. This will help low-income families that were previously unable to get assistance due to the American Rescue Plan.
Even if another extension can’t be pushed through next year, by making the fully refundable part of the Kid Tax Benefit permanent, all taxpayers with qualifying children will be able to claim $2,000 until 2025 when the credit would reduce to $1,000 per child under 17.