Researchers from the University of Michigan have been bolstering the case that the Child Tax Credit‘s expansion in 2021 helps low-income families live better lives. In anticipation of the pandemic, Congress approved the increased credit.
Families received a credit that was practically doubled, and instead of making individuals await for their tax returns, the money was made accessible right away. For kids under the age of 6, families could get up to half of their benefit in monthly bills of up to $300 per child.
Payments Lessened The Hardships
Some of the analysis is in, a little over a year following the extended tax credit payments began to reach families. This includes a brand-new working paper that Michelmore and her University of Minnesota colleagues co-authored and was released on Monday by the National Bureau of Economic Research.
According to the study, monthly paychecks made it simpler for households to pay their debts, purchase food, and stay away from so-called “material problems.” The study, which relied on surveys completed by thousands of people, discovered that the payments lessened hardships overall by 17% and food insecurity, particularly by more than 32%.
Issue With Distribute Payments
Over 30% of respondents to the U of M survey reported not receiving their monthly payment, which is the study’s one significant drawback. According to Michelmore, there might have been issues with the IRS’s ability to distribute payments. Concerns about child welfare or custody could have been the reason.
The number of qualifying children in each family was determined by the IRS based on prior tax filings. The parents might not have received the credit if the kids had previously been in foster care or lived with another family member.
The enhanced tax credits were permitted by the US Congress to stop in 2021. Still qualified for payments of approximately $2,000 per kid are eligible caregivers. However, several Democrats, including President Joe Biden, have been advocating for the 2021 expansion to be reinstated reports Michigan Radio.
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