CHARLESTON, W.Va. — Parents across West Virginia began noticing new money from the federal government in their bank accounts Thursday, part of the new expanded child tax credit program.
The $1.9 trillion American Rescue Plan passed by Congress earlier this year provides monthly payments to adults with children. Basically instead of receiving the credit on your taxes for your children when tax returns are filed you get it earlier in a payment.
Eligible families will receive $300 a month fro each child under 6 and $250 a month for those between the ages of 6 and 17. The payments come once a month through December.
West Virginia Center on Budget & Policy Executive Director Kelly Allen said the early payments will help many West Virginia families. Her organization has surveyed several residents to find how they plan on spending the money.
“It will help buy glasses. It will help cover the cost of clothing heading back to school. It will help buy medicine and make it easier to pay rent or put gas in the car, those types of things,” Allen told MetroNews.
Congress made three changes to the child tax credit in the rescue plan including the monthly installments, raising the maximum benefit from $2,000 to $3,600 for children under 6 and to $3,000 for older kids. Congress also made the program fully refundable. Allen said that means 169,000 additional West Virginia kids will get the full benefit of the credit even though their parents don’t pay taxes.
The expanded benefit will raise 23,000 children out of poverty, according to Allen.
The credit now reaches 94% of the children in West Virginia. Allen said she believes the money will help them.
“These types of credits or cash payments say families know best what they need. It allows them to buy whatever they need for their kids and their family,” Allen said.
The money isn’t income so you don’t have to pay taxes it and it also doesn’t impact income levels for other programs kids qualify for like CHIP and Medicaid.
Some say the additional money may keep some people from seeking jobs, something employers have been battling because of stimulus payments linked to the pandemic. Allen said it will have the opposite impact, removing hurdles to allow residents to work.
“We’ve done research on things like the stimulus and other payments of this type and we’ve found increasing economic security, reducing stress on families, actually allows them to do things they need to do to get to work,” Allen said.
Currently the payments are to end in December. Taxpayers will get the rest of this year’s annual credit on their taxes when they are filed next year like in past years but Allen said there’s a possibility the payments will continue. She said it was part of a new stimulus package rolled out by U.S. Senate Democrats Wednesday.
“What we’re hearing right now is that an expansion for a few more years is included in that package. Once families start getting these payments monthly it will be hard to go back,” Allen said.
The current payments phase out for individuals making more than $75,000 a year or $150,000 for married couples. Higher earners can still receive the non-expanded $2,000 per child credit.