As part of a comprehensive bid to revitalize and sustainably support American families, a proposal fronted by an approximate 250 lawmakers seeks the reimplementation and enhancement of the Child Tax Credit (CTC) program, which was among the most crucial initiatives of 2021. If passed, the legislation would provide regular monthly payments of $300, supplemented with an unprecedented ‘baby bonus’ of up to $2,000 for each newborn child in the United States.
During 2021, the Child Tax Credit played an instrumental role in buoying families through challenging economic times. The program granted variable amounts of financial support to families based on the number and ages of their children. However, two years on from the cessation of these valuable monthly payments, numerous studies have illuminated the gaping void it left in many households, leaving them without critical financial aid.
Renewing the Child Tax Credit: Proposed $300 monthly payments and $2,000 newborn bonus
In response to this troubling development, a cohort of legislators has emerged, advocating for a reformed Child Tax Credit. Their vision? To guarantee families $300 per month, coupled with an enticing incentive of up to $2,000 per newborn child in the year of the bill’s passage, or any subsequent year. The initiative, championed by Representative Rosa DeLauro of Connecticut, among others, has successfully garnered the backing of approximately 250 U.S. lawmakers.
Their collective aim is to reinstate the $300 monthly child tax credit payments and introduce a $2,000 ‘baby bonus.’ Interestingly, and to the surprise of many observers, the proposal enjoys sufficient bipartisan support. This development has intensified hopes that the expanded child tax credit, initially enacted in the American Rescue Plan law, could potentially be entrenched permanently.
The proposal on the table would institute transformative changes to the 2021 Child Tax Credit, including but not limited to the following provisions:
- Abolishing the existing income requirement to qualify for the full credit.
- Escalating the maximum child tax credit to $250 per month.
- Maintaining the provision for a $300 monthly child tax credit for children aged six and under.
- Incorporating a novel ‘baby bonus’ feature offering an additional $2,000 in the month a new child is born.
How will the proposed Child Tax Credit impact poverty levels in the US?
The expanded Child Tax Credit played a crucial role in reducing child poverty rates to historic lows in 2021. The 2021 American Rescue Plan (ARP) expanded the credit to increase the level of earnings to families receiving the credit and to make the credit more widely available and fully refundable. The expanded Child Tax Credit lifted 2.1 million children out of poverty, reducing child poverty from 9.7% in 2020 to 5.2% in 2021, the lowest rate on record.
The expanded Child Tax Credit would likely have greater poverty reduction effects for Black, Latino, and AIAN (American Indian and Alaska Native) children. Prior to the American Rescue Plan, many children, especially those from low-income families, received less than the full Child Tax Credit or no credit at all. Full refundability ensures that children in families with the lowest incomes receive the same amount of the Child Tax Credit as children in families with higher incomes, which is a driving force behind the expanded credit’s anti-poverty effects, especially among marginalized communities.
Legislative backing: Ensuring every child’s success through reformed Child Tax Credit
This progressive legislation, which was introduced in June, has the backing of key lawmakers, including Representative Suzan DelBene from Washington. DelBene implored her fellow legislators to “build upon” the American Rescue Plan by “permanently restoring this monthly benefit to ensure that every child has a fair chance at success.”
DeLauro, in her statement, highlighted that the expanded monthly payments have historically proven pivotal in “helping parents pay bills, maintain healthy and nutritious food on the table, buy clothes and school supplies, pay for a music lesson or a new pair of shoes, or manage a mortgage or rent payment.”
Further support came from Representative Ritchie Torres of New York, another lead co-sponsor of the bill. Torres underscored the transformative impact of the 2021 child tax credit. He pointed out that it reached over 61 million children and effectively lifted nearly 4 million of them out of poverty. “No government program has impacted so many Americans in such a short amount of time,” he stated. These remarks serve as a powerful reminder of the potential this proposed legislation holds in shaping the future of millions of American children and their families.
When could you claim your stimulus check if your baby was born in 2023
If you were planning to add a newborn baby born in 2023 to your 2022 income tax return and take advantage of the child tax credit, unfortunately, you will need to wait until the next year’s filing to enjoy the significant benefits.
When filing your taxes, you can only provide details relevant to the specific tax year. So, when you file your individual income tax return for 2022, you should only include information related to your income, children, marriage, and other relevant details for the year 2022.
So, if the stork left a new blessing in a cradle in your home, you’ll have to wait until 2024 to take advantage of the tax credit. In order to qualify, these are the requirements for the CTC, according to the IRS:
- Must be under age 17 at the end of the year, in this case 2023.
- Must be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew).
- Must Provide no more than 50% of their own financial support during that year.
- Prove that they have lived with you more than half of the year.
- Correctly claimed as your dependent on your tax return.
- Not file a joint return with their spouse for the tax year, or file it only to claim a refund of withheld income tax or estimated tax paid.
- Have been a U.S. citizen, U.S. national or U.S. legal resident alien.
To claim your CTC, you must include qualifying children and dependents on your U.S. Individual Income Tax Return Form 1040, available here, and attach a completed Schedule 8812 (Credits for Qualifying Children and Other Dependents), also available here.
Can families in all states receive the Child Tax Credit?
The short answer to this question is yes, families in all states can receive the Child Tax Credit, since it’s a federal program that applies uniformly across the United States. Therefore, regardless of the state in which a family resides, they are eligible to receive the Child Tax Credit as long as they meet the necessary requirements explained above.
Low-income families could get the CTC because, indeed, the program is designed specially to help these vulnerable households. Remember that the deadline to sign up for monthly CTC payments for the year is November 15. If you missed this deadline, you can still claim the full credit of up to $3,600 per child by filing your taxes next year.