WASHINGTON— Parents know all too well the cost of raising a child.
The Department of Agriculture recently estimated it costs $233,610 on average to raise a child until age 18.
But help may be on the way in the form of a child tax credit.
CURRENT TAX CREDIT
Currently, parents making less than $400,000 a year who file jointly qualify for a child tax credit.
Typically, it is $2,000/child each calendar year.
Parents receive the money when they file their taxes annually.
EXPANDING THE CREDIT
In the American Rescue Plan, proposed by President Biden and backed by Democrats, the child tax credit is expanded for 2021.
For parents with children who are five and under, a tax credit of $3,600 per child is being debated for 2021.
For parents with children under the age of 17, the amount would be $3,000 per child.
Bonus credits would phase out for parents with a combined income of more than $150,000 annually.
HOW IT IS PAID
A big difference in the proposal is how the credit would be disbursed.
Instead of one lump sum during tax season, parents would receive monthly installments.
The point of that is to address child poverty, which is a growing issue in the United States.
“Child poverty in America is really a national disgrace,” Tazra Mitchell is a policy advisor with the D.C. Fiscal Institute said.
“Each month you would get a check to help make ends meet, put food on the table and provide for your child,” Mitchell said.
More on the tax credit is expected to be revealed in the coming days. The House of Representatives is expected to vote on their version of the American Rescue Plan by the end of the week.