Don't Mess With Taxes

Photo by August de Richelieu from Pexels

Happy National Family Week!

Yes, this is a real commemoration that officially kicked off on Sunday, Nov. 21. It runs through the 27th. The week was launched around a half-century ago by a couple Indianapolis public school staffers. Since the 1970s, U.S. presidents have acknowledged National Family Week.

President Joe Biden's proclamation cites "the importance of spending time with relatives," which explains why the week that Americans celebrate Thanksgiving was selected for National Family Week.

Biden's statement also noted the "commitment to investing in our Nation's families."

Increased tax credit help for families: One of those commitments, at least from political and tax perspectives, is the Child Tax Credit (CTC), which was enhanced as part of the American Rescue Plan Act (ARPA).

The major ARPA change was an increase in the amount of the CTC, from $2,000 per child to $3,600 per child age 5 or younger or $3,000 for a child aged 6 to 17.

The COVID-relief law also instructed the Internal Revenue Service to issue half of the 2021 CTC amounts to eligible families this year. Those Advance Child Tax Credit (AdvCTC) payments have been going out since July. The November one was delivered last week. The final one is scheduled for Dec. 15.

Families who got the money will have received a total of $1,800 this year for each child age 5 or younger and/or $1,500 for each youngster ages 6 to 17.

Those who got the advance payments can claim the remainder of the CTC when they file their tax returns next year. Similarly, those who did not get any early credit amounts can claim the full CTC for which they're eligible when they do their 2021 taxes.

Temporary, but maybe for another year: The ARPA hike in the CTC is for the 2021 tax year only.

However, the Biden Administration's budget, dubbed Build Back Better (BBB), that the House passed last week would keep the increased amounts in effect for 2022. For that to happen, the Senate also must sign off on the BBB.

CTC used for child care: Supporters of the enhanced tax breaks point to data showing the CTC has helped reduce child poverty, a major goal of Biden’s.

This year's early payments also have helped families pay for costs related to their kiddos, according to the U.S. Census Bureau.

Families with at least one school-age child were more likely to spend the CTC on school expenses, while families with younger children were much more likely to spend it on child care.

"Three in 10 families that received the monthly  Advance Child Tax Credit payments spent them on kids' school expenses, and 1 in 4 families with young children used them to cover child care costs," according to a recent Census Bureau Household Pulse Survey.

The Census' survey also found that many families spent the AdvCTC money on the basics. From late July through September, around half of the payment recipients reported spending at least part of the tax credit on food and. Another 40 percent said they used the payment to help cover rent, mortgage, or utilities.

More family and tax posts on the way: Stay tuned to see if families will get the extra Child Tax Credit money next year.

Also, please stay tuned to the ol' blog this Thanksgiving week for more family- and tax-related posts.

The Census Bureau says of the United States' 123-million households, there are more than 83 million families, with an average of 3.23 members. But the country's statistical data agency acknowledges that families come in many forms.

Regardless of how you define family, I hope you get to spend time with your loved ones this week, even if there's no tax break for doing so!

You also might find these items of interest:

• A Child Tax Credit work requirement likely wouldn't work as proponents predict
• Where in the U.S. families are likely missing out on advance child tax credit checks
• The child care tax credit is a good claim on 2020 taxes, even better for 2021 returns

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