In particular, the payments are set to cut the child poverty rate in half, and anti-poverty groups say the program will do more to fill the gaps in racial equality than any single policy in decades. Children of color, in particular, who are disproportionately affected by hunger and poverty, benefit the most, said Sergio Mata-Cisneros, domestic policy analyst for Bread for the World, a Christian-based anti-poverty group in Washington, DC
“It’s really historic,” said Mata-Cisneros. “The people who have that extra cash flow can buy groceries and pay bills, while families whose parents have two jobs and the second job really sucks may be eligible to quit and spend more time with their kids.”
There is little debate about the impact of a tax program that makes monthly payments to families in need. Nearly half a million children in Georgia live in poverty – one in five children – according to federal estimates.
Policy experts warn, however, that there is no quick fix to the poverty dilemma. In the long term, the six monthly payments are unlikely to feed families, said Francine Lipman, professor of tax law at the University of Nevada in Las Vegas, who serves as Nevada tax commissioner.
In order to have a sustainable impact, other factors need to be considered, such as the availability of housing, food, transportation and health care.
“We have to see if it is supposed to alleviate poverty, need belts and suspenders and all hands on deck and really try to develop other strategies,” said Lipman, who specializes in access to justice in tax matters.
DiscoverBig help to families in the bailout law could lower the poverty rate in Georgia
Another challenge to the program’s success will be how well the IRS can accomplish the monumental task. In its role as the country’s tax collection agency, it is already overwhelmed and plagued by limited resources, tax politicians said.
It is now asked to determine eligibility and provide benefits to an estimated 39 million households, including some of the most volatile groups in the country. Low- and middle-income families tend to move more frequently and experience more changes in living conditions than the general population.
“If you can do this, and I’m very optimistic that you can do it, it will be an amazing thing,” said Mark Steber, chief tax information officer at Jackson Hewitt, the country’s second largest tax consultancy service.
Others warn that many of the country’s poorest families could be left out. Parents who haven’t filed federal tax returns because their income is too meager can register without a filer using a tool created by the IRS.
“We have to realize that it takes belts and suspenders and hands on deck to alleviate poverty and really try to come up with other strategies.”
But not all have access to the internet or to a computer. This makes it more difficult for the agency to get up-to-date information about families’ marital status, custody, the birth of a child, and other circumstances that may affect eligibility.
“It’s hard to see how all qualified families can get their share,” said Paul Sundin, an Arizona CPA.
Meanwhile, Onebo, Decatur’s mother, said that as soon as she receives her check, she will go to the grocery store.
“I’m just trying to keep food around the house,” she said.
Most families qualify
The original child tax credit program – launched in 1997 – provided credit of $ 2,000 per dependent child under the age of 17. However, this was not fully refunded and the parents had to wait to file their tax return. Those who did not file taxes were not eligible.
The Child Extended Tax Credit provides annual payments of $ 3,000 per child ages 6-17 and $ 3,600 per child for children under 5 years of age. There is no minimum income limit. And instead of keeping taxpayers waiting until spring to receive payment in the form of a refund, the $ 1.6 trillion stimulus package passed by Congress in March allows parents to half the monthly amount by December Receive payments. The parents will receive the rest with the tax return for the next year.
Not only low-income families benefit from this. Full payment is also eligible for individual taxpayers earning up to $ 75,000 per year and married couples who file an application together and earning up to $ 150,000. Above these amounts, payments begin to expire.
FAQ about taking prepayments
What do I have to do to receive advance payments for child tax withholding?
The IRS uses your 2020 or 2019 tax returns to determine eligibility and plans to send payments automatically. If you didn’t have to file a tax return for 2020, you need to take action and use the non-filer tool to file a simplified tax return.
Who is entitled to the payments?
No minimum income is required. There are income caps. For a full refund, the limit is $ 150,000 per year for married couples and $ 112,500 per year for single parents enrolling as head of the household. You must also have your primary residence in the United States for more than half of the year, but it does not have to be a permanent residence. You must also have a child who is 17 years old or younger that year and whom you can properly claim as a dependent. Your child must have a valid social security number. You can check your eligibility to receive the credits.
What is the fastest way to receive payments?
Submit your tax return electronically and fill out your financial account details so that you can receive your direct deposit payments. You must provide routing and account numbers.
When does the IRS start sending the payments?
July 15th is the date the IRS plans to begin paying out payments. They will then be sent monthly through December.
Do the payments affect any government benefits I receive?
No. Child tax credit prepayments may not count as income when determining whether you or someone else in your household is eligible for benefits or assistance, or how much you or someone else can receive under a federal program or under a state or municipality Program financed in whole or in part from federal funds.
Source: Internal Revenue Service
Russ Story, a financial advisor in Douglas, said many people were unaware of the sizeable payments. So he tries to raise public awareness by providing information about the loan on his website.
He said he anticipates some couples will try to set aside some of the payments in favor of the child to help fund their education, including college or a technical school.
“The people who are in the upper echelons, in the middle and upper income brackets, give them an opportunity to advance this child’s potential success,” he said.
However, money cannot have a lasting effect on the children of the poor.
“The people who are in the upper echelons, in the middle and upper income brackets, give them an opportunity to further this child’s potential success.”
– Russ Story, a financial advisor in Douglas
Researchers at Columbia University’s Center on Poverty and Social Policy predicted that America’s bailout plan would lift more than five million children out of poverty this year. However, this was only possible within the framework of a combination of policy elements of the Rescue Act that went beyond the extended child tax credit.
These provisions include the expansion of two major federal aid programs for families in need: the Supplemental Nutrition Assistance Program, formerly known as Grocery Brands; and distribution of one-time direct payments of $ 1,400 to eligible adults and children.
Photo credit: Alice Onebo
Another option that would have a big impact on families in need would be to make extended credit a permanent provision in the tax code, said Allison Johnson, a national activist for the Washington, DC-based parenting group ParentsTogether Action, which has affiliates in Georgia .
“We work a lot to just bring out the parents’ voices,” said Johnson. “We want everyone to know why these payments need to continue beyond December.”
One Georgian who would like to continue the payments is Kakena Jones, who has six children, four of them between the ages of eight months and twelve years. The family lives in Nicholls, an agricultural community of 3,800 in southeast Georgia, where 40% of households live in poverty.
She has been working in a dormitory for the mentally ill for more than 17 years. But recently she had to take an evening job at Lowe to pay for childcare for her 4 year old and eight month old. When the tax credits expire in January, she’ll get by on less again.
“It hurts, it really hurts when you hear your four-year-old say, ‘Mom, I want you here with me,’ but you need to get a second job right now,” said Jones. “And when you come home, they sleep.”
