Understanding the Impact: New Child Tax Credit Heads to Senate


Recently, the U.S. House of Representatives endorsed a $78 billion tax deal, encompassing a broadened child tax credit and diverse tax breaks for businesses. The pandemic-driven expansion of the child tax credit had previously been instrumental in helping millions of children out of poverty. However, with the expiration of the credit, this positive trend reversed… statistics reveal that the poverty rate soared from 5.2% to 12.4% as families lost access to the expanded benefits. 

Efforts by Democrats to reinstate the federal expanded child tax credit have faced setbacks in the past, with previous attempts falling short. Nonetheless, lawmakers are currently on the brink of achieving a partial restoration of the credit. Although close with The House passing the child tax credit bill on Jan. 29, Senate approval is uncertain. A date for the vote has yet to be set.

At the heart of the House bill's agenda lies the expansion of the CTC to enable more families to access crucial financial assistance. Traditionally, eligibility for the CTC demanded that a parent have an annual income of at least $2,500, potentially excluding families with minimal or no income from receiving the credit. The proposed revisions offer a more adaptable approach by permitting taxpayers to utilize income from either the current or previous year in determining eligibility. This would be helpful for individuals facing sudden income fluctuations. Under the updated CTC criteria, parents can claim credit for each qualifying child who has resided with them for more than half of the year and meets the IRS' dependency criteria. Furthermore, eligibility extends beyond biological parents to encompass foster parents and other relatives, such as grandparents or stepparents; provided the child satisfies the necessary requirements. 

Advocates for broadening access to the CTC, like the Center on Budget and Policy Priorities, estimate that approximately 16 million children from impoverished households could benefit from the expanded credit in its inaugural year. This highlights the significant influence that such legislative actions can wield in alleviating economic struggles and advancing a more equitable society.

Sourced: https://www.kiplinger.com/taxes/congress-negotiating-child-tax-credit 



DJL Accounting & Consulting Group, Inc.
1570 South Canfield-Niles Road #C102
Youngstown, Ohio 44515 

Phone:  330 779 0781



Click here to log in to Sharefile and securely upload your documents.

If you are new to Sharefile and need login credentials, call us at 330 779 0781.