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COVID cash to change the caliber of children’s lives

By Deborah Bailey
Special to the AFRO

Tucked into President Biden’s historic 1.9 trillion Covid-19 relief package is a “game changer” according to the American Academy of Sciences, The US Conference of Mayors, The National Urban League, economists, child-advocates and a chorus of other anti-poverty supporters.  An increased tax credit for low and moderate income families included in the plan has the potential to ease the burden of the nation’s 11 million children living in poverty by this summer.   

The American Rescue Plan Act of 2021 was passed by Congress this week and will be the first major piece of legislation signed into law by President Biden. The Rescue Plan will quickly roll out $1400 one-time relief checks starting this month for individuals earning $75,000 or less per year and $2800 for low and moderate income couples who file tax returns jointly.  

But a much less heralded provision in the bill is the impact for families.  The American Rescue Plan-2021 plan includes a fully refundable expanded child tax credit to $3000 for children six through 17. It raised the tax credit for children under six to $3600 this year.  Eligible households will qualify for the child tax credit no matter how little income they earn.  

“The tax credit provides a significant relief to families” Maryland Senator Ben Cardin said this week as the House of Representatives deliberated the package. 

“Emergencies like this (Covid-19) are when government can best bring together the resources that will make a positive difference in peoples’ lives. The provisions for the child tax credit included in this bill will cut the child poverty rate in half,” Cardin enthusiastically added.

In the past, parents claimed the child tax credit annually when filing their income taxes. However, the American Rescue Plan-2021 provides a new provision for this year only, to get money in the pockets of families who need it more quickly. 

The IRS is planning to send direct deposits to eligible parents with children from July to December 2021.  This would ensure low and moderate income families have assistance throughout the year.

Full advance payments of the tax credit will go to single filers earning up to $75,000, head of household filers earning 112,500 or less and joint filers earning up to $150,000. Parents earning above this threshold up to $200,00 for single filers and $400,000 for joint return will receive phased down payments.  

The current tax credit for families with children is $2,000 for children between six and 16 and $3000 for children below age six.  Children aged 17 are typically ineligible for the child tax credit but will be able to benefit for 2021. 

The American Rescue Plan Act – 2021 passed the US House of Representatives for a second time on March 10, after the Senate changed several key provisions in the original version of the legislation. The original legislation, adopted by the US House on Feb. 26, called for an increase in Federal Pandemic Unemployment Compensation (FPUC) to $400 per month through the end of August. 

But the final bill passed earlier this week kept Federal unemployment payments at $300 per month through Sept. 6. The final bill also omitted the controversial $15 federal minimum wage increase President Biden wanted but garnered only partial support on Capitol Hill. 

Still, Maryland Rep. Kweisi Mfume is glad Congress was able to deliver tangible support in spite of changes to the original legislation. “We worked on behalf of Marylanders and all Americans to help save lives and help protect livelihoods,” said Rep. Mfume. 

“COVID-19 infection rates might be plateauing but the pain and strife our families feel has not subsided. There are too many Marylanders still dying from the virus, still unemployed, and still hungry and facing eviction. I am proud of the commitment we made to help families make ends meet,” Mfume said.