Child Tax Credit updates 2022 – $750 direct payments being sent to thousands in just weeks – find out exact date

Setback for additional payments, part two

Senator Manchin expressed concerns over the spending amount and its effects on inflation.

In a news release about his “no” vote, Sen Manchin said: “The non-partisan Congressional Budget Office determined the cost is upwards of $4.5trillion which is more than double what the bill’s ardent supporters have claimed.”

“They continue to camouflage the real cost of the intent behind this bill.”

Setback in push for additional payments

Hopes of extending child tax credits into 2022 stalled after a Democratic senator said he would not vote for the plan.

The Biden administration originally proposed extending the payments through 2025 before the proposal was reduced to only one additional year.

Child tax credits are part of the nearly $2trillion Build Back Better Act, which includes a slew of social spending programs and climate practices for the United States.

The spending package failed to get the key vote of Democrat Senator Joe Manchin.

Monthly stimulus checks proposed for families

Utah senator Mitt Romney has put forward the Family Security Act that would be similar to the Child Tax Credit.

Eligible families with children up to five years old would receive $350 a month, and $250 for children six to 17 years old.

By comparison, the Child Tax Credit gave families $300 a month for children under six, and $250 for children between six and 17.

The bill has yet to be formally proposed but could end up being bipartisan, with it being negotiated by both sides of Congress.

To expedite payment, use direct deposit

According to the IRS, the quickest method to collect a child tax credit payment is to file a tax return electronically and choose direct deposit.

The possibility of a paper check being lost, stolen, or returned to the IRS as undeliverable is eliminated with direct deposit.

It also saves money for the taxpayer; according to the IRS, each paper return costs more than $1, but each direct deposit costs only a cent.

Iowa announces $25million investment, continued

Gov Reynolds has directed state agencies to implement investing over $500million of state and federal funds to address the crisis.

Investments include the Child Care Challenge Fund grants, creating an estimated 9,000 new child care slots across the state, as well as the Child Care Stabilization Grants and Recruitment and Retention Bonuses for Child Care Workers.

The state will start accepting applications online Friday, June 17th.

Applications must be submitted by Monday, July 18th.

Iowa announces $25million investment for child care workers

Iowa Governor Kim Reynolds recently announced the state will offer $25million in support for child care, which will be provided by funds from the American Rescue Act.

Of the funding, $20 million will be allocated towards infrastructure investments that build or expand child care capacity.

The remaining portion of the money will be used to support arrangements between employers and child care centers to expand available slots.

“This program underscores Iowa’s commitment to working families by putting child care where it’s convenient for parents, children, and employers,” said Kelly Garcia, Director of Iowa’s Department of Human Services.

Expanded CTC would cover costs of inflation

The letter also cited an open letter published in April by 133 economists, who argued that the expanded child tax credit is a logical answer to help families fight inflation.

“The expanded Child Tax Credit is one of the easiest, most
effective, and direct tools currently at our disposal to help families deal with the impact of inflation on family budgets.”

While the economists did not strongly call for action like the civil and racial justice groups did, all agreed that the expanded CTC would make an “important difference” for families on a budget without contributing to an increase in inflation.

Fifty civil rights groups ask Congress to expand CTC

On Monday, June 6, a group of 50 civil rights organizations including the NAACP and the National Urban League sent a letter to Senate Majority Leader Chuck Schumer, imploring him to extend the expanded child tax credit.

Citing data showing the expanded CTC contributed to declining poverty and higher quality of life, the groups called for an immediate reinstatement of the $3,600 credit.

“Poverty is a policy choice. Allowing millions of children, including more than 2.5 million Black and Latino children, to fall back into poverty is also a political choice,” the groups wrote.

How to compute adjusted gross income

The first step in computing your AGI is to determine your total gross income for the year.

Your gross income includes your salary and any earnings from self-employment ventures, investment dividends, retirement income, and things of similar nature.

To arrive at your final AGI, you will subtract certain amounts from your total income.

For example, teachers can deduct unreimbursed classroom expenses, self-employed people can deduct insurance premiums, and everyone can deduct charitable donations.

An income calculator might be helpful during this process, and you can find one on TaxAct or TurboTax.

Adjusted gross income explained

When filing, your eligibility for certain tax credits and rebates might be based on income requirements, which are based on adjusted gross income (AGI).

AGI is simply your total gross income (earnings before tax or other deductions) minus specific deductions.

Generally, the more deductions and credits you take, the lower your taxable income.

CTC lifted thousands out of poverty in Alabama

Alabama reporter Josh Moon shared on Twitter in September that the expanded child tax credit helped lift thousands of kids out of poverty.

“Alabama had more than 800,000 people living below the poverty line in 2020. The Biden child tax credit payments – a measly $300/month per child – lifted more than 80,000 children out of poverty in this state,” he wrote.

“Alabama is using nearly a quarter of its COVID money to build prisons.”

How many families were impacted by the enhanced CTC

A study from the Center on Poverty and Social Policy at Columbia University found that the overall monthly child poverty rate rose sharply between December 2021 and January 2022.

Almost all households in the United States received payments of $250 per month for children aged 6 to 17 and $300 per month for kids under the age of 6, however, the benefits were tapered off for wealthier families.

The annual cost of the initiative was estimated to be over $120billion.

According to official figures from The Washington Post, more than a 61million children in around 36million households got the payment in December.

Increasing CTC coverage could reduce hardship

Finally, the NBER found in their previous report from before the payments concluded, that “increasing the CTC coverage rate would be required in order for material hardship to be reduced further.”

“Self-reports suggest the lowest-income households were less likely than higher-income families to receive the first CTC payments,” the paper added.

“As more children receive the benefit in future months, material hardship may decline further.”

“Even with imperfect coverage, however, our findings suggest that the first CTC payments were largely effective at reducing food insufficiency among low-income families with children.”

Payments reduced food insufficiency in marginalized groups

The Bureau also found that child tax credit payments helped certain specific groups more strongly.

“The effects on food insufficiency are concentrated among families with 2019 pre-tax incomes below $35,000, and the CTC strongly reduces food insufficiency among low-income Black, Latino, and White families alike,” the study found.

CTC payments ‘strongly reduced food insufficiency’

The National Bureau of Economic Research released a paper on the impacts of child tax credit payments and revealed startling findings.

First, the child tax credit payments “strongly reduced food insufficiency: the initial payments led to a 7.5 percentage point (25 percent) decline in food insufficiency among low-income households with children,” according to the study.

New Mexico tax credits explained, part five

On top of the child tax credit two-part rebate of up to $1,000, New Mexico also approved a one-time means-tested benefit.

Married couples and individuals are once again eligible for $500 and $250 respectively, but up to a certain income level.

Couples must make $150,000 or less to qualify, while the cap is $75,000 for individuals.

These payments should be distributed in July, according to KRQE Alberquerque.

New Mexico tax credits explained, part four

The second payment from New Mexico’s two-part rebate will go out in August, KRQE Alberquerque reported.

Individuals can expect another $250 payment, and joint filers will receive $500 in addition to the check they’ll get in the next two months.

There are no income limits on these payments, so almost all New Mexico residents will qualify.

New Mexico tax credits explained, part three

Lawmakers in the Land of Enchantment approved the payments in February and April to help consumers combat rising costs, including gas.

Couples filing jointly will receive $500 in this round of payment, and individuals will get $250.

New Mexico tax credits explained, part two

In addition to the state child tax credit, New Mexico families can expect more immediate relief.

The first installment of a two-part payment to New Mexico residents is set to go out no later than June 30, according to KRQE Alberquerque.

New Mexico tax credits and rebates explained

Governor Michelle Lujan Grisham signed House Bill 163 on March 8, 2022, which will provide qualifying New Mexicans with a child tax credit of up to $175 per child.

The credit is refundable and will save New Mexico families a total of $74million a year, according to estimates.

Representative Micaela Lara Cadena said: “New Mexico’s Child Income Tax Credit will provide much-needed relief to hardworking parents doing their best to raise their children in these trying times.”

What is the child tax credit?

The child tax credit is money given out to families to help them support their dependents financially. 

The federal credit was worth $3,600 per child in 2021 – but is set to return to $2,000 as lawmakers in Washington have failed thus far to extend it.

When was the CTC established?

The child tax credit was established in 1997.

It has been around for more than two decades and a proposal in the American Rescue Plan, which was signed into law last March, increased the amount in payments.

“Previously, families received a credit worth up to $167 per month per child ages 16 and under,” Vox reported.

Tax returns delayed due to staff shortage, continued

More than one-fourth of taxpayer support centers, where people may book in-person sessions, are closed due to staffing shortages, per the report.

Approximately half of the centers have only one or two personnel and are dependent on their availability.

“Millions of tax returns are not being timely processed, refunds are not being timely issued, and taxpayers are not receiving timely assistance with their tax account issues” as a result of the shortfalls, according to GovExec.com.

Tax returns delayed due to staff shortage

The Internal Revenue Service is failing to process millions of tax refunds on schedule owing to staffing shortages as it continues to struggle to hire badly needed staffers, GovExec.com reported.

The IRS had onboarded just 9.5 percent of the approximately 5,500 submission processing workers it plans to hire for the filing season as of mid-March, according to a report released on May 5.

In that role alone, the government is still short around 5,000 personnel.

Despite this, the IRS is roughly 1,200 personnel shy of where it wants to be, according to the Inspector General.

States called on to provide expanded CTCs

With no federal expansion expected, the Center on Budget and Policy Priorities (CBPP) recently called on state lawmakers to introduce child tax credit payments.

“State policymakers should shift toward equitable, targeted approaches to helping families meet basic needs through improving or expanding tax credits like CTCs,” senior policy analyst Samantha Waxman wrote for the Center on Budget and Policy Priorities Off the Charts blog.

Not only can CTC payments help reduce poverty and support children and families, but the CBPP also noted that the tax credits improve local and state economies as well.