(Yahoo!Finance) - The parents of about 60 million children are poised to receive their third child tax credit payment this week.
The buffed-up monthly checks are primarily being used to cover household expenses and pay down debt, according to census data, and are lifting a huge number of children out of poverty.
Now, Democratic lawmakers are planning to keep these “family stimulus checks” going for years to come — but the proposal faces some big obstacles ahead.
The expanded child tax credit was one of the big COVID-19 relief measures included in the $1.9 trillion stimulus bill President Joe Biden signed in March.
Each child aged 6 to 17 can now qualify their family for up to $3,000 in tax credits. (That’s up from the previous limit of $2,000 for kids up to age 16.) Kids under 6 can qualify their families for even more — up to $3,600.
The credits have also become fully “refundable,” opening them up to those families struggling the most. If the credit reduces a household’s tax burden below zero, you can now receive the negative amount in cash. (Previously, households needed to earn at least $2,500 a year for the credit to be refundable.)
Households are currently receiving half the credit upfront through monthly payments — as much as $250 or $300 — throughout the second half of this year. The rest can be claimed in the form of tax refunds next year.
Early research shows the first payment alone helped slash child poverty by 25%, according to Columbia University’s Center on Poverty & Social Policy.
The center adds that if all eligible children are covered by the payments going forward, the credit has the potential to reduce monthly child poverty by up to 40%.
Lawmakers butt heads over expansion
The expanded child tax credit is due to end in 2022, but given the program’s success, some Democratic lawmakers are looking to extend the bigger payments for another three years.
The proposal released last week by the powerful House Ways and Means Committee also seeks to make the refundability feature permanent.
Yet these changes may face an uphill battle in Congress. Republicans — and more budget-conscious Democrats — oppose a simple extension.
In response to the proposal, Republican Ways and Means members released their own statement challenging the claims Democrats have made about the effectiveness of the child tax credit.
“Democrats have turned the Child Tax Credit into Welfare Without Work, which if they make permanent will harm families, risk the loss of billions of taxpayer dollars in waste and fraud, and cost American jobs,” the statement reads.
Democratic Sen. Joe Manchin of West Virginia also wants to see more restrictions on eligibility, telling CNN on Sunday: “There’s no work requirements whatsoever; there’s no education requirements whatsoever for better skill sets. Don’t you think if we want to help the children, the people should make some effort?”
Clock is ticking for families to claim payments
As lawmakers debate an extension, time is running out for parents who have yet to sign up for this year’s advanced payments.
Families who missed out on their first three payments can catch up quick if they log on to the IRS child tax credit update portal to register by 11:59 p.m. Eastern on Oct. 4.
Instead of having half the credit spread out over six installments, it will be divided by three. Families will receive a trio of $500 payments for each child ages 6 through 17, and payments of $600 for kids under 6.
The portal will only be available until mid-October, so families that don’t sign up by Oct. 15 will have to wait to receive their payout until they file their taxes next year.
What to do if you need money right now
Not everyone is eligible for the monthly payments.
The expanded portion of the credit starts phasing out once your income reaches $75,000 ($150,000 for couples), while the base $2,000 credit phases out once your income reaches $200,000 ($400,000 for couples).
If your family isn't getting the payments — or the money isn’t enough — here are a few options to pull together your own family stimulus check.
Deal with your debt. Carrying a credit card balance from month to month can bury you in expensive interest. Tackle the problem by folding your balances into a single debt consolidation loan. With a lower interest rate, you’ll not only slash the cost of your debt, you’ll be able to pay it off faster, too.
Trade your mortgage payment for a cheaper one. Own your home and haven't refinanced in the past year? Nearly half the homeowners who've taken advantage of the pandemic's rock-bottom mortgage rates are saving $300 a month or more, according to a recent Zillow survey. Thirty-year mortgage rates are under 3% again, so check out some refi offers to see how much you might save.
Cut your insurance costs. You might be overpaying by hundreds of dollars for car insurance this year if you haven't looked around for a better rate lately. A little comparison shopping could help you find a much cheaper policy. And you can use the same strategy when the time comes to renew or buy homeowners insurance.
Turn your pennies into a portfolio. Even if you don't have much money, you can still earn returns from today’s red-hot stock market. A popular app can help you invest your "spare change" from everyday purchases.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.