Didn’t Get a January Child Tax Credit Payment? Here’s Why Not
Millions of families received cash infusions over the last six months thanks to the advance portion of the child tax credit — but it seems as though the buck will, unfortunately, stop there. A continuation of the monthly check would have come through with the passage of President Joe Biden’s Build Back Better Act, but as the legislation remains in limbo so do families’ hopes of economic relief.
See: Child Tax Credit Guidance Updated by IRS
Find: Stimulus Update: How To Request an IRS Trace for Lost Child Tax Credit Payment
Perhaps the largest impact the sudden halt to monthly payments will have concerns childhood poverty. Research from the Center on Budget and Policy Priorities (CBPP) shows that expanding the maximum child tax credit would reduce child poverty by more than 40%. Full refundability, they say, “drives 87 percent of this anti-poverty impact.”
The CBPP’s research also indicates that even the old child tax credit level, which was a clear $2,000 per child under the age of 17, being made fully refundable would reduce childhood poverty by a whopping 20%. Fully refundable means there is no need to ever pay the credit back. As of right now, the regular child tax credit — which all families will revert back to for tax year 2022 — is not fully refundable.
With inflation now at 7% and the prices of simple grocery items like beef and chicken surging over 20%, the cutoff simply could not come at a worse time, some analysts suggest. Another piece of research from the CBPP showed that about 90% of families were using the money received from the child tax credit on basic necessities. “Among households with incomes below $35,000 who received the Child Tax Credit, 88 percent spent their payments on the most basic needs: food, clothing, rent, a mortgage, or utility bills,” the CBPP said.
The tax credit payment also helped low-income families cover educational costs. About 40% of low-income families used their advance child tax credit payments to pay for books, school supplies, tuition, after-school programs and even transportation to and from school, per a recent Census Bureau survey.
Learn: Child Tax Credit: You Could Get a Double Payment in February — Here’s Why
Explore: Child Tax Credit and Stimulus 2021 Recipients: Be on the Lookout for IRS Letter With Tax Filing Info
Without the passage of the BBB Act, the child tax credit will revert back to its pre-pandemic levels — a clear $2,000 tax credit annually for families with children under 17 years old — instead of the $3,600 per child under the age of 6 (and $3,000 per child aged 6 through 17) which is the current benefit to be paid out for tax year 2021. “I don’t think any of us are expecting anything else to pass,” said Colin Strother, a Democratic operative, per Politico.
The IRS will begin processing tax returns on Jan. 24, and the best thing families can do right now is to make sure they file their taxes for 2021. This will ensure they receive all CTC benefits they are entitled to.
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This article originally appeared on GOBankingRates.com: Didn’t Get a January Child Tax Credit Payment? Here’s Why Not
