WASHINGTON — Wednesday was the last day millions of California families will begin to get their $250 to $300 per child monthly child tax break payment.
Qualifying parents have been eligible for such payments since July, but that monthly, expanded benefit is effective only in 2021.
Extending the expanded credit next year is part of the Biden administration’s massive tax and spending package, which is stuck in the Senate right now. Congress is expected to wrap up this year’s business later this week or next week.
In California, inaction would mean that the estimated 4.3 million families, with 7.1 million children, will see the monthly payments they’ve received stop. In total, the expanded credit is estimated to help 86% of the state’s children under 18, according to the Center on Budget and Policy Priorities, a progressive research group.
The end of the benefit could mean 1.69 million California children will fall back below the poverty line or deeper into poverty, the group estimates.
Continuing the expanded credit in 2022 would mean these savings for California families with tax cuts next year, according to the Institute on Taxation and Economic Policy:
— Less than $29,100 income (lowest 20%): $4,080
— $29,100 to $51,700 (next 20%): $2,850
— $51,700 to $83,200 (next 20%): $2,780
— $83,200 to $151,100 (next 20%): $2,340
— $151,100 to $358,700 (next 15%): $1,870
The Internal Revenue Service said Wednesday that nationwide, monthly payments this month will total about $16 billion and reach more than 36 million families. Most payments are done by direct deposit. The funds should be in the accounts starting Wednesday.
If Congress fails to act, the credit would revert to its former level of a maximum of $2,000 per child under 17, and the benefit would be reduced even more, or ended entirely, for many low-income families.
The expanded child tax credit was increased in 2021 for one year only. Qualifying families with children 6 to 17 can receive a credit of $3,000 per child a year. Families with children under 6 can receive $3,600.
Since July, qualifying families have been able to get the credit as a monthly payment of up to $300 per child. The rest of the year’s credit will be available on 2021 tax returns.
Supporters maintain that the credit has been an important tool in not only helping families whose income suffered during the pandemic, but in combating child poverty. Rep. Don Beyer, D-Va., chairman of Congress’ Joint Economic Committee, called the credit a “critical lifeline.”
Efforts to keep it going have stalled. A 2022 extension is part of the $2 trillion Build Back Better plan, which has been tied up in congressional negotiations largely because Sen. Joe Machin, D-W.Va., is reluctant to back the package. Since all 50 Republicans are expected to oppose the bill, Manchin’s vote is crucial for passage.
Manchin is sympathetic to the child tax credit. “I’m not opposed to the child tax credit. I’ve never been opposed to the child tax credit,” he told reporters Wednesday.
The easiest solution would be to simply pass legislation that only dealt with the credit, but doing so would mean finding a way to pay for it.
“They have to find a way to pay for it and they haven’t discussed it with us,” said Sen. Joni Ernst, R-Iowa.
President Joe Biden supports an extension but wants it to be paid for, the White House has said.
There’s another potential hurdle: A separate extension would need 60 votes to succeed, meaning that if Democrats stuck together, 10 Republican votes would be needed.
White House press secretary Jen Psaki said Tuesday that Biden still intends for his "Build Back Better" legislation, which includes an extension of the expanded Child Tax Credit, to pass in time for checks to be delivered in January.
“Again, our focus on the legislative front is on Build Back Better and getting it done,” Psaki said.
That could be tough. The Internal Revenue Service has said it needs to know by Dec. 28 whether or not checks will go out in January.
