2024-01-18 17:09:10
NY – The agreement in the United States Congress to expand the refund under the Child Tax Credit (CTC) seeks to reach dozens of poor families in the United States.
In summary, Lawmakers plan to increase the current $1,600 rebate to a maximum of $2,000 by 2025.
According to information on the Internal Revenue Service (IRS) website, A family is eligible for the full amount of the credit if their annual income does not exceed $200,000 or $400,000.in the case of marriages.
This Tuesday, leaders in Washington DC announced their intention to advance negotiations to expand access to CTC and the amount of money for reimbursement.
Although the measure has not yet been approved, Activists consider that the initiative is an important step to fix some of the problems in the application of credit such as the exclusion of many poor families. Because the credit is based on the parents’ income, a family with little or no income may not qualify for the CTC.
The mobilization in Congress occurs more than two years after the CTC extension expired under the Biden Administration as part of the measures to tackle the economic crisis due to the COVID-19 pandemic.
Expansion of CTC through American Rescue Plan
The American Rescue Plan led to the largest extension of the CTC. Under the program promoted by the Biden Administration, millions of families received automatic monthly payments of between $250 and $300 per eligible minor.
The legislation increased the credit from $2,000 per child over 6 years old to $3,000, and from $2,000 to $3,600 for children 6 years old or younger.. The change also raised the age limit for eligibility from 16 to 17. Married couples with incomes of up to $150,000, and $112,500 in the case of a female head of household, received the full credit.
The expansion expired in 2021. The following year, the benefit returned to its previous limit.
According to the Parents Together Action organization, this had a negative impact on many low-income families.
“Between the increase in the cost of food, child care and the resumption of student loan payments, it has become more difficult than ever for millions of parents to make ends meet,” said Ailen Arreaza, executive director of the entity.
The Biden Administration favors a permanent extension of the CTC.
“The new Child Tax Credit enacted in the American Rescue Plan is only for 2021. That is why the president firmly believes that we should extend the new CTC for years. “That is what we propose in the ‘Build Back Better’ agenda,” the White House specified at that time in an entry on its website.
Three key points of the proposal to expand the CTC
The proposal on the table in Congress would make it easier for more families to qualify for the CTCin addition to returning more money to them through tax refunds.
According to the CBS News report, taxpayers could use income, whether from the current or previous year, to calculate the credit and obtain the greatest benefit.
In second place, the calculation to determine the CTC refund would change so that more poor families will receive more money back by the IRS.
The new calculation would be based on multiplying the income of one of the parents by 15%, as well as by the number of children. Under the current calculation, a parent’s income is multiplied by 15%, which limits the tax credit for poor families with more than one child.
The third key point of the change would be the provision to increase the maximum refundable amount to $1,800 in 2023$1,900 in 2024 and $2,000 in 2025.
Center on Budget and Policy Priorities (CBPP) estimates that approximately 16 million children in low-income families would benefit from the change. A quarter of those families would get more than $1,400 the first year; and 40% would receive $1,000 or more.
Agreement includes extension of contributory credits to companies
In exchange for expanding the CTC, the agreement between Republicans and Democrats contemplates the extension of tax credits to companies.
Republicans are calling for restoring business deductions that were scrapped to pay for the reduction in the corporate tax rate as part of the 2017 Tax Cuts and Jobs Act.
He Ways and Means Committee in the House and Finance Committee in the Senate lead the negotiations.
Keep reading:
Increase in Child Tax Credit would be approved in Congress; legislators seek increase in reimbursement under “Child Tax Credit” or TCT
Poverty rate increases for Latino children after expiration of the Child Tax Credit: CBPP
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