Almost a full year into the global pandemic, families across the U.S. are struggling to make ends meet — and more children are going hungry, advocates say.
To fight child poverty that has worsened during the current crisis, a proposal in Congress would temporarily increase the child tax credit in a way that would essentially provide families with another set of stimulus checks, beyond the third, $1,400 relief payments now in the works.
These checks would be more regular: paid out monthly, for up to $300 per child.
How would these stimulus checks work?
Food insecurity among families with kids has risen by nearly two-thirds over the last year, according to the nonprofit Save the Children. To help, a boosted child tax credit has been included in the $1.9 trillion COVID relief bill now making its way through Congress.
President Joe Biden originally proposed enhancing the child credit to make sure families received at least $3,000 for each child under the age of 17 — $3,600 for kids under 6 — for a year. Congress made a tweak so the IRS would send families monthly payments from July to December, to account for half the expanded credit.
Parents would receive $250 per child ($300 for kids under 6) each month for six months. The other half of the credit would then be refundable next year, on parents' 2021 tax returns.
As with the regular stimulus checks, the money would likely help cover essential needs, like food and rent, which the U.S. Bureau of Labor Statistics said were the main ways the very first direct relief payments were spent last spring.
Others used their money for investing, according to a bureau survey, or for other unspecified things — possibly to buy affordable life insurance to offer financial protection to family members. Sales of policies have seen a huge increase during the pandemic.
Who would qualify for the new checks?
Today's existing child tax credit is worth $2,000 per child under the age of 17. For lower-income households, up to $1,400 of the credit is refundable, but you must earn an income of at least $2,500 to get the refund.
The bill that the Democrats who run Congress hope to complete and put on Biden's desk by mid-March not only increases the amount families would receive by up to $1,600 per child, but would also make the entire credit fully refundable — and include 17-year-olds.
Note that the new credit would have targeted income limits, aiming to help the neediest families. It would begin to phase out for individuals with adjusted gross incomes of $75,000, head-of-household filers earning $112,500, and couples filing jointly who make $150,000.
The IRS would base eligibility on the most recent tax return in its system, which would be the 2019 return for taxpayers who delay getting their 2020 taxes in.
To ensure they qualify for the credit, families who saw a drop in income last year may want to fire up their tax-filing software and get their return in soon.
What if your family needs more money right now?
If your family may not qualify for the enhanced credit or you can’t wait until July for the extra aid money, here are ways to find some cash right away:
Become your own insurance adjustor. With everyone staying home more during the pandemic and driving less, many car insurance companies have been giving customers price breaks. Not yours? Cut them loose and shop around for a better policy. Plus, did you know you could save hundreds on homeowners insurance by comparing rates on that coverage?
Say goodbye to high-cost debt. If you’ve been relying on credit cards throughout the pandemic, you’ve probably been accruing very expensive interest. A lower-interest debt consolidation loan can gather up your balances into a single, cheaper payment — helping you find freedom from your debt sooner.
Find savings to "make your own" stimulus check. Budget-friendly can still be fun. Dump streaming services and any other monthly subscriptions you're not using. Or maybe you have a hobby or special skill you can turn into a side hustle, to bring in extra income. And, when you do have to make purchases, save yourself some time hunting down the best prices and coupons online — just download a free browser add-on that will do all that automatically.
Refinance your mortgage and slash your payments. Even if you’ve had your home for only a year, taking advantage of low mortgage rates to refinance your mortgage could save you thousands of dollars over the next year. Mortgage tech and data provider Black Knight recently said millions of U.S. homeowners could cut their housing payments by over $300 per month through a refi.