Extending the enhanced child care tax credit
The current budget package includes “the most transformative investment in children and caregiving in generations,” according to a White House statement from Oct. 28.
One of its hallmarks is to give more than 35 million families a major tax cut by extending the expanded child tax credit.
The monthly “family stimulus checks” from the expanded child tax credit run out at the end of this year. Many parents are pleading for the support to continue.
“As mothers, we say loud and clear: we need help,” says a letter to the president signed by mothers in all 50 states. “Many moms want to be at work right now, but have either been laid off or can’t return to work because of demands at home. It is time for our government to have our backs.”
Some Democratic leaders thought the pandemic aid should become permanent, and Biden wanted the beefed-up credit to last at least through 2025. Yet, the White House settled for a one-year extension to boost the odds of getting the entire budget passed.
Republican opposition is led by Senate Minority Leader Mitch McConnell, who, in a floor speech, dubbed suggestions to continue the expanded child credit payments as “new monthly welfare deposits.”
What’s in store for next year?
If you want an idea of what another year of the tax credit could look like, here’s what is in the Democrats’ current budget bill. Remember, though, it could change.
Biden’s plan, if approved, would provide monthly payments in 2022 to the parents of nearly 90% of American children, according to the Oct. 28 White House release.
“This historic tax cut will help cover the cost of food, housing, health care and transportation, and will continue the largest one-year reduction in child poverty in history,” the White House says.
Families would receive up to $3,600 — $300 per month for each kid under age 6 and $250 monthly for each child between the ages of 6 and 17.
In a recent open letter to Congress, 448 economists say research shows that continuing the expanded child tax credit can greatly improve the lives of kids in America and reduce child poverty.
Earlier this year, when schools remained closed, many families used the payments to build up their savings and pay down debt. After classrooms reopened, some parents used the funds to pay for children’s school supplies and child care, according to a new study by the U.S. Census Bureau.
How to improve your family finances now
You don’t have to leave your financial fate in the hands of Congress. Here are just a few moves you can make right now to give your family more financial security.
Downsize your insurance bills. Being stuck at home has its perks. With many of us driving less during the pandemic, car insurance companies have been handing out discounts. Is yours unwilling to bend? Easy — shop around for a better policy..
Cut the cost of your debt. It’s hard to get ahead if you’re stuck with high-interest debt, like the kind on credit cards. Consider paying off those balances with a single, low-interest debt-consolidation loan. That will leave you just one bill to deal with and potentially free you from debt years sooner.
Score a better mortgage rate. Interest rates are historically low at the moment; if you refinance, you could save hundreds each month and thousands over the life of your loan.
Turn your pennies into a portfolio. Even if you don't have much money, you can still earn returns from today’s record-breaking stock market. A popular app will help you invest your “spare change” from everyday purchases into a diversified portfolio.