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Child tax credit 2022: why did families only receive payments for six months?

The Senate has not passed the Build Back Better bill, meaning that families will not receive a payment of the child tax credit this month or next.

The Senate has not passed the Build Back Better bill, meaning that families will not receive a payment of the child tax credit this month or next.

When Congress passed the American Rescue Plan in March 2021, the structure and amount of the child tax credit was altered. The legislation mandated that the Internal Revenue Service (IRS) distribute a monthly advance of the payment between July and December 2021. The value of the credit was increased from a non-refundable $2,000 credit, to a fully refundable credit worth $3,600 ($300 per month) for children under six, and $3,000 ($250 per month) for children between six and seventeen.

Shortly after the bill was passed, President Biden and many in his party advocated for an extension of the child tax credit's current for five years. After negotiations between the caucus took place, a one year extension was included in the version of the Build Back Better bill passed by the House in November.

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How to claim the remaining value of the credit?

When families file their taxes this Spring, they will be able to claim the remaining value of the credit. For those who were eligible to receive the benefit but did not meet the sign-up deadline, a tax return claiming the credit can be submitted, and the full value for number of dependents claimed will be distributed with your tax refund.

For example, if a eligible family has two children one age five, and one age nine, the family will be sent $6,600 if they had not received any previous payments, and $3,300 if they had received payments between July and December.

White House urges Republicans to support stand alone child tax credit bill

Some more moderate members of the Democratic caucus are becoming increasingly worried about the idea of passing the $1.2 trillion Build Back Better bill, and are now advocating the historic package be split up. However, the BBB bill was going to be passed using a Senate parliamentary rule known as budget reconciliation which means it could evade the sixty-vote filibuster. If the bill is to be broken up, and ten Republicans do not support it, the stand alone bills cannot pass. Supports of the child tax credit are frustrated with this move as it makes the fate of the extension more unlikely. 

On 22 January, Press Secretary Jen Psaki was asked if she believed that Republicans could come around to the idea of a standalone tax bill.She responded saying "Well, listen, if there are 10 Republicans who want to come support the Child Tax Credit or something else, great. They’re welcome. Let’s have a conversation about it."

On the same day, House Minority Leader Kevin McCarthy was asked his thoughts on emerging data that the child tax credit made serious dents in child poverty rates.

Rep. McCarthy provided a nonsensical answer, blaming Democrats for the fact that the Boston Bomber was sent a stimulus check. While this is true, the reporter was not asking about the stimulus check program, rather the credit which has made unsustainable impacts on child poverty rates, which are expected to rise now that the payments have ended. The deflection fell flat, as no other policy proposals were detailed during McCarthy's response.

What is included in Mitt Romney's child tax credit plan?

Utah Senator Mitt Romney presented his own child tax credit proposal last February, but in the end the Biden proposal was added to the American Rescue Plan. The Romney Plan, called, "The Family Security Act would provide a monthly cash benefit for families, amounting to $350 a month for each young child, and $250 a month for each school-aged child."

The Romney plan differs in that the value of the credit is higher overall, and allows pregnant women to claim the credit before the child is born.

A fact sheet with information on the proposal states that it would "immediately lift nearly three million children out of poverty, while providing a bridge to the middle class – without adding a dime to the federal deficit." Additionally, the Romney plan is able to be paid for by eliminating "the State and Local Tax Deduction (SALT), which is an inefficient tax break to upper-income taxpayers ." Interestingly the SALT Deduction was passed into law under President Trump's signature piece of legislation the 2017 Tax Cuts and Jobs Act. Many progressives had called for these deductions to be eliminated, but Democrats have opted to include them in the Build Back Better bill.

One issue progressives have with the bill is that it does not allow immigrant children to benefit from the credit.