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Child Tax Credit: Is Congress Going To Approve More Monthly Payments?

Paul S Voakes

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Child Tax Credit

Many US families received what could be the last installment of child tax credit payment for 2021 this month. But, unfortunately, with the talks of extension of aids still in a deadlock in Congress, there is very little chance of any new aid benefits coming forth reports bankrate.com.

President Joe Biden and his $2 trillion Build Back Better social spending bill had envisaged augmenting the maximum credit that households can claim to $3,600 per child age five or younger and $3,000 per child ages 6 to 17. Additionally, it also tried to make the credit fully refundable and distribute it to families who are eligible for the credits via monthly checks for the entire 2022.

Child Tax Credit

Child Tax Credit

However, his plans have gone awry with Sen. Joe Manchin, a Democrat from West Virginia whose vote looked as a tiebreaker, refusing to support the bill. In an interview with Fox News, the Senator said he could not support the bill due to surging inflation concerns.

However, experts opine that the plan was crucial in present circumstances with the Omicron variant spreading and fears of lockdown looking a real possibility. Moreover, the program would have helped 40% 0f children out of poverty as per the neutral Center for Budget and Policy priorities.

Here is a scenario of how it could affect child tax credit as the calendar turns from 2021 to 2022 and how it could affect the 2022 tax-filing season and whether an extension is likely.

How the child tax credit will look in 2022

The welcome news is that child tax credit is here to stay. However, without the support of Congress, the program will revert to its original format in 2022, which is however not going to be as generous.

  • Dependent under age 17 will get a $2,000 credit.
  • Income limits have been put as $400,000 for married couples and $200,000 for all other filers, including single taxpayers and heads of households.
  • For citizens whose tax bill falls below the credit, the amount will get 70% partial refundability.

Is Congress going to approve more monthly child tax credit payments?

Congress’s possibility of approving $1,000 or $1,600 top up and sending eligible families monthly checks again is very bleak. Much will depend upon Manchin’s support for the Biden’s Build Back Better plan. The bill was earlier approved on November 19 by the House of Representatives, nearly four days after Biden signed his $1 trillion infrastructure bill into law.

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Only 28% Of Americans View Economic Conditions Of Their Country As Excellent

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The American economy has experienced much turmoil during the COVID-19 pandemic. Indeed, according to the Motley Fool, the United States of America’s economy has come a long way since the beginning of the pandemic.

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Of course, the pandemic sore the unemployment level in the year 2020 reaching a record high. In addition to this, finding work during this period has been extremely difficult. As such, the federal government issued various stimulus and COVID relief payments and credits and unemployment benefits to combat the effects of the pandemic.

The State Of U.S. Economy

Currently, the American economy is has a 7.5% inflation rate or consumer price index. This has surpassed the 40-year record high since 1982, that is, since last month. However, besides this – the unemployment rate has decreased, and it seems the United States of America is ‘getting back to work,’ and their country’s economy is starting to recover. However – a recent survey conducted by the Pew Research Center showed that 28% of participants viewed the country’s economic conditions as good or excellent.

Why Such Economic Pessimism

It seems the supper high inflation rate leads most Americans to have such a negative view of their economy. Indeed close to 90% of participants viewed food and gas prices as higher than last year, 89 and 88 82 percent respectively.

Is Inflation Always Bad?

However, some economists argue that inflation, is at times, a sign of a healthy economy and does not always have to be viewed in a negative light. This is easier said than done though, with living costs increasing – consumers can feel the pinch in their budgets.

The argument, however, is that supply and demand determine the unit price. So if there is an increased demand – and supply does not necessarily change – unit price must increase. This means consumer price index increases or inflation. So an increase in demand could show people are buying more, and this might at least be the signs of a recovering – or active economy.

When supply chain issues are fixed – inflation should decrease. Furthermore, since December last year, unemployment is the lowest it has been since the start of the pandemic. So perhaps such an opposing economic viewpoint – can be replaced, which is realistic, in this light.

 

 

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Child Tax Credit

Experts Predict Long Payment Delays From IRS This Season, Provide Few Tips To Speed Up The Process

David Crabtree

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The IRS faces an enormous backlog due to staff shortages amidst the pandemic, it has recruited new officials, but the challenge remains tough. IRS is yet to process millions of tax returns of last season. The IRS officials are crushed under a ton of paperwork; millions of taxpayers will file their returns this year. The authorities will need to devise a compact strategy to overcome the backlog. CNBC reports that IRS had 6 million unprocessed returns by December 31, this is large numbers, and 2021’s tax returns might take some time.

Experts Predict Long Payment Delays From IRS This Season, Provide Few Tips To Speed Up The Process

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IRS Workers Are Sparse

Experts suggest various ways to slim the time lag between filing the returns and receiving the payments. CNBC reports that the IRS only had 15,000 workers to answer around 24 million customer calls during the first six months of 2021, one person for 16,000 customers. Experts suggest taxpayers avoid the paperwork to the maximum extent; filers can switch electronic modes to fast forward the documentation. Taxpayers need to use advanced features to process tax refunds and other pending payments quickly. The electronic method will ease the burden on IRS officials during data verification.

Taxpayers Should File Electronic Tax Returns

IRS quoted Erin Collins, the National Taxpayer Advocate; she said, “Paper is the IRS’s kryptonite, and the agency is buried in it. The IRS still transcribes paper returns line by line, number by number, they received around 17 million original paper returns last year, and the processing delays have run as long as 10 months.” The taxpayers need to recheck their tax returns thoroughly; the wrong information might lead to payment abortion and several lengthy delays. The officials, too, will have to go through the same twice or thrice, which makes the process more complicated.

The families who receive enhanced Child Tax Credit or Stimulus payments or both need to exercise extra caution while filing their returns; the IRS issued letters to provide data for the amount allocated. The beneficiaries for the remaining half of the Child Tax Credit payments or extra credit should give complete information in their tax returns. IRS has announced April 18 as the deadline; individuals need to complete the filing process before the date.

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2021 Tax Refunds Will Provide Additional Money To Low-Income Americans

David Crabtree

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The federal government introduced several relief programs to assist the sufferers of the pandemic. Millions of low-income families and individuals will likely return to their old living ways as the benefits have ceased. However, the tax refunds might bring extra money to several eligible households in 2022. IRS issued half of the Child Tax Credit to the families within the income threshold. The families will receive the remaining half after filing their returns. Many parents are eligible for additional checks after having a new child or a dependent in 2021. Cnet reports that the IRS will issue the suitable amount after information verification, eligible families will automatically receive the payments and tax refunds.

2021 Tax Refunds Will Provide Additional Money To Low-Income Americans

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Families Will Receive The Remaining CTC

Families received $1,800 for each child below six and $1,500 for each between 6 and 17. Single taxpayers with annual income below $75,000 and married parents below $150,000 were eligible for the benefits. Cnet reports that the payments phase out at $220,000 and $440,000 for each. The families failing to receive the benefits last year due to incorrect data can avail themselves of the amount through their tax returns. Taxpayers can check their payment status through the online IRS portal. Last year, parents with an additional child needed to update their information to receive the credit.

Taxpayers With A Newborn In 2021 Will Receive Credit

Cnet reports that many families received overpayments due to data miscalculation; the IRS will claim back the payments or deduct the amount from the tax refunds. The parents with an income change need to update their information; the IRS will manage their repayments based on the new income. The parents with children turning 18 last year will have to repay the money to the IRS. The families with lower income in 2021 than in 2020 will also be eligible for the extra benefits.

The fate of the Child Tax Credit program is uncertain at present. The recent rejection of the Build Back Better bill shattered the hopes of millions of Americans. The CTC program offered valuable support to low-income families and allowed educational facilities for children below the poverty level. The cessation of the payments will lead to severe financial trauma.

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