Fresh Proposal To Restore Expanded Child Tax Credits: House Democrats Aim To Restart Improved Monthly Payments

child tax credit

The Child Tax Credit is back to its pre-pandemic level despite repeated attempts by President Biden and the Democrats to retain the expanded version of 2021. The present tax season is a stark reminder as the tax rebate this year was way less than in 2022.

For the 2021 tax season, which fell in 2022, taxpayers received at least 50% of the expanded Child Tax Credit stimulus check. That came to either $1,500 or $1,800 per child. Families who opted out of the monthly payments between July and December 2021 received the full amount of $3,000 for each child between six and seventeen years and $3,600 for each child below six years. 

But this year the payments will be back to the pre-pandemic level. It is for this reason that the Internal Revenue Service had warned taxpayers that they should not expect their tax rebates to be on the same level as in 2022.

During the pandemic, the American Rescue Plan Act signed by President Biden in March 2021 provided relief for American families through a series of tax rebates and stimulus checks. One of the most popular and successful was the improved version of the Child Tax Credit payments. From $2,000 a year per child, the CTC payments were expanded to between $3,000 and $3,600 depending on the age of the child. 

Starting in July 2021, the IRS started sending out stimulus checks worth $93 billion in advance Child Tax Credit payments to parents. These payments were either direct transfers to bank accounts or paper checks sent through the US Postal Service. The payment continued through December 2021. These six-monthly checks totaled fifty percent of the total amount given to each child. The balance came in as tax rebates or stimulus checks to filers depending on the tax amount. 

Eligible families who did not opt for the monthly stimulus checks or did not receive them could collect the full amount against their income tax return filed in 2022. The monthly advance payments and the increase in the amount to almost double were not the only changes in the expanded child tax credit payments. 

One significant change was the increase in one year for children from sixteen to seventeen. Even more important was that the Child Tax Credit was made fully refundable to qualifying taxpayers. But it was subject to income limits

That meant you could receive the advance child tax credit stimulus check even if you did not owe any tax in 2021. This was a significant move and immediately brought in the lowest third of the American population under the cover of the CTC payments. This group of citizens had so far been denied the payments as their income was below the minimum Adjusted Gros Income above which tax returns were mandatory. 

Child Tax Credit

The Impact Of The Expanded Child Tax Credit Was Tremendous And Unprecedented

The Expanded versions of the Child Tax Credit proved to be one of the most successful schemes not only for the Biden administration but the most successful for decades. The expanded stimulus check amount reached over 61 million children. And evidence reveals that the monthly stimulus checks halved the poverty level during the six months the money was distributed to families with children. 

Research conducted by the American Medical Association revealed that American children were more likely to be victims of poverty than any other age group. Before the pandemic hit America, over ten million American children lived in poverty. It is one of the highest child poverty rates among high-income countries on both sides of the Atlantic. 

And fifty percent of such children lived in what could be termed extreme poverty. Extreme poverty denotes that a four-member household has an annual earning of $13,086. This income amount is reviewed every year. 

The association reported that the payments in 2021 resulted in an increase in child wellness. It also improved the ability of their parents to pay for household expenses and also brought down children’s food insufficiency significantly. 

But the AMA also pointed out that the gain was negated immediately after December 2021 when the payments were abruptly halted starting January 2022. The credits again reverted to pre-pandemic levels. The results in January 2022 were alarming, as there was a 41% increase in childhood poverty. 

The Child Tax Credit Payments In 2023

With President Biden having failed to convince Congress to renew the expanded Child Tax Credit, the program has returned to its previous level. There are a number of requirements that you and your children must meet before the Internal Revenue Service will allow you to claim the $2,000 per child. Some of the requirements for the credit payment include an income threshold of $400,000 for married couples and $200,000 for individual filers and heads of households. 

The credit amount gets reduced by $50 for each increase in income by $1,000 over the threshold. Every qualifying child must be a resident alien or a citizen of the US. They must also have a valid Social Security number. Other than their own child, the child can also be a stepchild, foster child, sibling, half-brother, half-sister, or even a descendant of the mentioned categories. 

child tax credit
child tax credit

The claimant must also have provided at least half of the financial support and the qualifying must have lived with the claimant for at least six months of the year for which the Child Tax Credit is being claimed. 

Despite the Child Tax Credit being stopped beyond the first year, there is still a possibility that Congress will take additional and affirmative action in the future to bring back the top-up of up to $1,600 per child. President Joe Biden has repeatedly called upon Congress to bring back what has proved to be his favorite scheme. 

In a State of the Union address, the Democratic presidents exhorted Congress to fully restore the expanded Child Tax Credit. He said that it has given sufficient breathing room to tens of millions of parents. It also brought down child poverty by 50%. He pointed out that child poverty was at its lowest level ever during the six months in which the payments were made.