There was a large jump in the rate of child poverty following the end of advanced child tax credit payments, according to a new study done by Columbia University’s Center on Poverty and Social Policy. Many fear that missing these payments could put a hard stop to the progress the U.S. has made in its recent achievements of poverty reduction.
Study Stats
The study conducted by Columbia University’s Center on Poverty and Social Policy estimates about 3.7 million more children were living in poverty by January, the first month the advanced Child Tax Credit payments were not sent. These additional children mean the U.S. saw a 41% increase from December, the last month advance payments were distributed.
In addition to this, the study cites that the monthly child poverty rate increased from 12.1% in December to 17% in January. This would mean that the U.S. child poverty rate has hit its highest level since December of 2020 when the U.S. was facing extreme levels of unemployment and another round of COVID-19. Many parents likely budgeted based on the expectation they would continue to receive the advance payments, and we are now seeing the negative impact.
Payments Stalled Alongside Build Back Better Plan
The advanced payments began being made in July but have since halted due to the Build Back Better bill being stuck in a sharply divided Congress. To recap where this bill sits one can look at how Joe Machin is feeling, since he is the longest holdout and the main reason causing the bill to stall. Manchin recently cited his opposition to the child tax credit’s massive price tag among his reservations with the bill. Earlier this month, Manchin called negotiations on Biden’s Build Back Better bill “ dead.”
This being said, it does not look like advanced payments will be coming to the aid of Americans anytime soon. The advanced payments were up to $300 per child and were delivered directly to bank accounts on the 15th of the following months; February marked the second missed payment of the year. It is unclear if we will see the enhanced Child Tax Credit come back into play, but it is clear, there isn’t likely to be movement on it for a while.
How will this affect your tax return? Feel free to give us a call at 516-541-6549. And don’t forget to visit our website for more news updates!