CHILD TAX CREDIT
How many Child Tax Credit payments remain for 2021?
The Democrats have been pushing the benefits of the Child Tax Credit expansion in recent months and hope they are close to securing a one-year extension.
Next week the IRS will distribute the sixth round of direct payments as part of the expanded Child Tax Credit, the final instalment of the monthly support that has so far been secured by Congress.
Since July the Child Tax Credit, previously a once-a-year credit, has been sent out in the form of a direct payment worth up to $300 per month for eligible families. The IRS has confirmed that the December instalment will be sent out on 15 December.
This year 50% of the total value of the credit is being distributed as monthly payments, while the remainder will be applied at filing time to reduce a filer’s tax bill or boost their refund. This one-year expansion was included in the American Rescue Plan signed into law back in March but there are plans in place to extend the monthly support beyond 2021.
Child Tax Credit expansion to be included in the Build Back Better bill
The key legislative priority for the Democrats this December is the passage of the Build Back Better bill, the huge economic package that is thought to cost around $1.75 trillion. The proposal forms the final part of President Biden’s three-pronged legislative agenda for his first year in office and the ambitious package is designed to reshape the country.
Included in the bill is a single-year extension for the current system, a substantial compromise on Biden’s initial plan to secure the programme through 2025.
The Build Back Better Act extends the expanded Child Tax Credit, which has been a game changer for working families. It helped roughly 60 million children and helped cut child poverty in America by more than 40%.— Joe Biden (@JoeBiden) November 29, 2021
However while the enhanced monetary value and monthly payment structure would only get a one-year extension, the bill would make the Child Tax Credit permanently fully refundable. This means that there is no bottom threshold of household earnings to be met to qualify for the full amount, unlike previously.
Moderate Democrats hold out on Build Back Better passage
The Democrats currently wield unified power in Washington with majorities in both Houses of Congress and Biden in the White House. However they have control of the Senate by only the slimmest of margins and, assuming they are unable to win any votes from Republican members, need every single Democrat to vote for the bill to get it through.
The two most elusive Democrat votes have been that of Sen. Joe Manchin and Sen. Kyrsten Sinema, two moderates who are yet to pledge their support to the Build Back Better proposals.
Last week Manchin responded to a question about the Child Tax Credit extension by describing it as a “work in progress,” suggesting that he is looking for further concessions before voting for the bill. Sinema told CNN in an interview that she was negotiating in "good faith" with other Democrats but refused to be drawn into public comments on the subject.
If a deal can be found before the end of the year, the IRS may be able to act quickly and ensure that a January payment is sent out soon after the bill is signed to prevent a gap in coverage for recipients.
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