October 29, 2021

Child tax credit has been a reliable source of additional income for families struggling through the pandemic. While there were plans to continue the monthly checks for at least another five years, it seems the program will be coming to an end in about one year.

What is changing and why?

Proposals to extend child tax credit for one year are being discussed by lawmakers. Initially, the benefits were to be extended through 2025, but it’s now one of the programs being cut as the federal government plans for more stimulus checks.

The previous benefit checks lifted 3.5 million kids out of poverty, according to CNBC. With results like that, many democrats are debating to keep the child tax credit for years to come.

Others, however, are criticizing the program’s broad focus. Some proposed changes from opposing views include:

  • Limiting the credit to families earning $60,000
  • Adding a work requirement

Limiting the child tax credit could limit its impact on American households. Those in favor of extending the credit are hoping that Biden will include children with individual taxpayer identification numbers—such as undocumented children. This would help an additional 1 million kids.

Are the child tax credit changes concrete?

Negotiations are ongoing regarding the future of this benefit. Should the enhanced credit end in a year, there will be benefit options available for those who need it. Prior to the American Rescue Plan boosting benefits, the child tax credit was $2,000 per child under the age of 17. The credit was also partially refundable up to $1,400. There are also programs such as Supplemental Nutrition Assistance Program benefits, which have been enhanced to help low-income families.

Whether the child tax credit enhancement will continue permanently, for another five years, or end in just over a year from now is still being decided. Though it seems the fate of the program will fall into a middle ground to provide a more focused poverty program.

Utilizing child tax credit and other programs

As of now, you are still able to utilize the program and other credit tax programs that you may be eligible for. The child tax credit isn’t gone yet, so it’s best to use it while you still can.

Should you find yourself with a tax liability and in need of additional help with resolving back taxes, the Fresh Start Program may be the best option for you. At Optima Tax Relief, we help clients resolve their tax debt through Fresh Start and help them stay on track after through our protection plan.

Give us a call at 800-536-0734 to speak with one of our tax associates today.