Of all the benefits offered by the American Rescue Plan, its increased child tax credit payments may do the most to help families get over the devastating effects of the pandemic.
The rescue plan, signed into law by President Joe Biden in March, is a broad package dedicating $1.9 trillion to various ways of helping Americans overcome COVID and recover from the havoc it has wreaked on the nation.
The economic disruption has been especially hard on families with children. The cost of child care, already high, has risen. A lot of providers now face increased operating costs as they limit the numbers of children they serve, for social distancing reasons, and spend extra money to keep things sanitary.
Costs in Virginia were already high before the pandemic. In 2019, the Economic Policy Institute said that Virginia ranked No. 10 on the list of states with the most expensive child care. That year the average annual cost of infant care in Virginia was more than $14,000. For a 4-year-old, the annual cost was nearly $11,000.
The coronavirus pandemic has also thrown many people out of work, making it harder to pay for basic necessities such as food and housing for their families.
Many parents who managed to keep their jobs faced new child-care challenges when schools switched to virtual learning.
The increased child tax credits in the American Rescue Plan will give many parents money immediately to help them and their families weather these tough times.
Under the plan, the child tax credit will go up from $2,000 per child to $3,600 for each child under the age of 6, and $3,000 for children ages 6 through 17. The full tax credit will go to married couples filing jointly who earn up to $150,000 a year, to a person filing as head of household who makes up to $112,500 annual and to single filers who earn up to $75,000.
People who have had a new baby or adopted a child since filing their 2020 taxes are eligible.
One key aspect of the new credit is that half the money will be paid monthly; the other half will come when parents file their 2021 taxes.
The first monthly payments were issued July 15. Eligible people who filed tax returns for 2019 or 2020 should get the monthly payments automatically without having to do anything. The money should have arrived as a deposit into their bank account, if the IRS already has that information, or as a check in the mail.
The money — $300 a month for each child under 6, and $250 for each child 6 to 17 — will keep coming every month through December.
Getting the money monthly rather than in a lump sum should be a boon for families dealing with increased costs or unemployment. They will get the money when they need it to keep things going, and they can count on it each month.
In Virginia, that extra $250 or $300 is expected to help the families of 1.59 million children in the commonwealth, according to the Biden administration. It should lift 85,000 children out of poverty.
The money won’t affect families’ eligibility for income-based programs such as Medicaid and food stamps.
One problem is that not all people are aware of the new credit. If you are eligible, make sure you received the July payment. If not, go to the IRS or White House website for help. Spread the word to other parents.
Parents who didn’t file taxes for 2019 or 2020 should sign up for the payments at irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool.
The White House’s ChildTaxCredit.gov website has more information.
The expanded child tax credit is only for this year, but already there are efforts in the works to extend it.
The increased child tax credit is a great way to get money where it’s needed, when it’s needed. It should make a huge difference to Virginia families struggling to make it through these tough times.
