Families With Children Could Be in Line for $4,200 a Year in Stimulus Funds

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Speaking of massive relief.

Important points

• Republican lawmakers are introducing their version of a child tax credit.
• If their plan goes through, many families may be in line for monthly payments.

Last year, when unemployment rates were high and COVID-19 vaccines were in short supply, lawmakers were quick to hand out stimulus aid. Not only did a round of $ 1,400 stimulus checks hit Americans’ bank accounts, but the child tax credit received a generous boost in 2021, raising its maximum value from $ 2,000 per child to $ 3,600.

Equally important is that half of the credit was paid in monthly installments from July to December. This has meant that some families are eligible for up to $ 300 per month per child.

This year, however, there was no stimulus check approval and no monthly child tax credit payments. In fact, the child tax credit’s maximum value this year returned to $ 2,000. And that put many families in a very difficult place.

While the US economy was fairly strong from a job perspective, inflation was also booming and gas prices soared. This puts a lot of pressure on families, especially those who have exhausted their savings earlier in the pandemic.

But now, Republican lawmakers are introducing a new proposal that could take the place of improved child tax credit. And if it goes through, many families can get great relief.

Will families get a lifeline?

The Family Security Act 2.0 was recently enacted by a group of Republican lawmakers, and its purpose is to provide more financial security for parents. According to the proposal, families will be eligible for a monthly payment of $ 350 per child up to the age of 5 for a total of $ 4,200 per year. Families will also be eligible for a monthly payment of $ 250 per child aged 6 to 17 for a total of $ 3,000 per year.

These payments will apply to up to six children per household. And they are more generous than the increased child tax credit allowed last year.

But there is a catch. To receive those payments in full, families need $ 10,000 in file income for the previous year. Those who earn less will have their payments reduced.

The proposal also includes income limits. The above payments will be phased out for single parents earning $ 200,000 or more, and for married parents earning $ 400,000 or more filing jointly.

A lifeline even before children are born

What makes this new proposal unique is that parents will be eligible to start receiving monthly payments while their babies are still in the womb. Specifically, it provides for payments to start four months before a child’s deadline.

A difficult source of funding

A major reason why the improved child tax credit did not stay in place for 2022 was the cost involved. And this begs the question – where will the money for this new benefit come from?

Some people may not like the answer. The legislators proposing this new tax credit are proposing cuts to the earnings-related income tax credit (EITC), a credit that helps low- and middle-income households.

Having children is not a requirement for the EITC as it is the child tax credit, although having dependents can affect suitability and result in a higher payday. And cutting the EITC could hurt many families who do not have children and therefore cannot make up the money in the form of payments under the Family Safety Act 2.0.

Not only that, but the proposal calls for the elimination of the SALT, or state and local taxes, deduction. This could hurt many taxpayers across the country.

Will the proposal go through?

While the Family Safety Act 2.0 may be well-intentioned, it does have some flaws. And some experts warn that cutting the EITC could put many people in a worse financial position, even if they have children and are eligible for monthly payments. As such, the proposal can be greeted with setbacks. But the fact that legislators are trying to put money in the hands of parents is in itself a good thing.