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Monthly expanded child tax credit payments begin this week

Bennet among senators advocating to make credit permanent

Colorado parents will begin to receive up to $300 in monthly payments beginning this week as part of the newly expanded child tax credit.

As of now, the monthly payments will end in December. Sen. Michael Bennet, D-Colo., is one of a handful of Democratic senators advocating to make the expansion a permanent program.

“The poorest population in America are children. And we have some of the lowest economic mobility of any country in the industrialized world,” Bennet said on the Senate floor Wednesday. “We tell ourselves we’re the land of opportunity, but we haven’t looked like that for a very long time, and the policies that have been passed here haven’t helped. And that’s where the child tax credit comes into being.”

The expanded credit is projected to benefit more than 1 million children in Colorado and help lift 57,000 kids out of poverty in the state, according to data from the Center on Budget and Policy Priorities.

“The expanded child tax credit is the biggest investment Washington has made in kids and families in more than a generation,” Bennet said at a virtual town hall.

What this means for families

Instead of a one-time credit during tax season, half of the expanded child tax credit will be distributed on a monthly basis to families.

Parents of children between 6 and 17 years old will receive $250 a month per child, and those with kids younger than 6 will receive $300 a month per child. The rest of the money will be sent when families file taxes next spring, totaling up to $3,600 per child.

Full payments will be allotted to families with heads of households earning up to $112,500 and joint filers earning up to $150,000 a year. Most families earning more than that will receive $2,000 in credit for each child.

For single-income households earning more than $200,000 and joint-filers making over $400,000, the credit starts to phase out.

Families that haven’t filed taxes can visit the Internal Revenue Service’s website to sign up for monthly payments.

Parents who aren’t citizens are eligible to receive payments for their citizen children, as well. Individual taxpayer identification numbers and the child’s Social Security number are required.

Most payments will be sent through direct deposit, but can also be received through paper checks or debit cards, according to the IRS website.

90% of rural families to benefit

Unlike the past model, the expanded child tax credit will help families in deep poverty – many of which are families of color, said Ashley Burnside, a policy analyst at the Center for Law and Social Policy.

“Black, and Latinx and Indigenous children are disproportionately likely to be denied the full credit under prior law, despite the fact that they face poverty at higher rates,” she said in an interview with The Durango Herald.

Previously, families had to report a minimum income of $2,500 to qualify for the child tax credit. If parents were unable to do this, they were disqualified from the credit, Burnside said. The expansion addresses this issue by making the credit fully refundable, Burnside said.

In Colorado, the credit will help about 350,000 kids who have been left out of the credit in the past, according to the Center on Budget and Policy Priorities. More than 90% of families in rural Colorado are expected to benefit, as well.

More action needed, experts say

The expanded child tax credit is unprecedented and projected to assist millions of families, Burnside said.

“Up until now, we haven't had a policy that truly invests in parents and caretaking quite like what’s being proposed right now,” she said.

The monthly payments model is a strong choice by lawmakers to better address ongoing costs such as rent and child care, Shai Akabas said in an interview with the Herald.

“This will, in many cases, help families meet needs that they have on a recurring basis as opposed to just during tax season,” Akabas said.

But the credit is “just one piece of the puzzle” when addressing child poverty, Burnside said. Creating universal child care and paid leave systems and raising the minimum wage are other necessary steps necessary to tackle the issue, she said.

The program itself needs to be refined if it were to become permanent, said Shai Akabas, economic policy director at the Bipartisan Policy Center.

If the expanded child tax credit were to become permanent, there are details that need to be addressed within the program, as well, Akabas said.

The payments would need to be refined so higher-income families do not receive as much credit as lower-income, he said. Positive work enforcement should be in place, as well.

“I think it’s a formula that both has the potential to reduce poverty, and has the potential to keep more people in the workforce,” Akabas said. “Which, in turn, has obviously beneficial effects on poverty in and of itself.”

As of now, the senators leading the charge to establish a permanent expanded child tax credit are all Democrats. Bi-partisan support is needed to move the program forward, Akabas said.

“For the child tax credit to be durable and sustainable, it really needs to have bipartisan support so that it is not subject to the political winds,” he said.

Kaela Roeder is an intern for The Durango Herald and The Journal in Cortez and a 2021 graduate of American University in Washington, D.C.