On July 15, most parents in Vermont will start receiving a new monthly payment from the federal government, as part of the Covid-19 relief signed in March.
This new monthly payment system is a revision of the existing child tax credit, which was first adopted in 1997. Parents usually received a lump sum on their spring tax returns.
Credit per child was previously scaled on a bell curve, based on household income, with the lowest and highest income families receiving the lowest returns. Until this year, the maximum credit was $ 2,000 per child.
The US bailout, which President Joe Biden enacted in March, changed this law in two ways. He increased and standardized the amount – to $ 3,600 for each child under the age of 6 and to $ 3,000 for each child between the ages of 6 and 17.
It also changed the timing of these payments. Now, instead of a single sum, half of that money will be advanced and sent to families in increments every July through December. This works out to a monthly payment of $ 300 for each child under 6 and $ 250 for each child between 6 and 17.
“Our job was to do something really essential – only Congress could do it because the federal government has the fiscal flexibility and the fiscal capacity to provide resources,” Representative Peter Welch said at a conference on Tuesday. bar press. “But the hard work was how to take those funds and translate them into real help for real people? “
Liz Scharf, director of community economic development at Capstone Community Action in Barre, said the change was profound in that it made funds accessible to Vermonters who had little or no earned income. She cited examples such as people receiving Social Security or disability benefits, or single mothers who stayed at home for a few years with their new children.
“This will generate thousands of dollars for families who in the past never qualified for this credit,” Scharf said.
The IRS will determine eligibility for monthly payments from the 2020 tax returns and distribute the payments the same way it did for this year’s tax returns – either by direct deposit or by check. by mail.
Households that have not filed a 2020 tax return can register through an IRS online portal.
Scharf notes that this system can make it more difficult for low-income families or parents without a driver’s license to sign up for the payments they are entitled to. She and other Capstone staff are urging families in this situation to seek help enrolling.
“I didn’t understand how this is going to work, but I’m pretty tenacious,” said Laura Sudhoff, who provides tax assistance to Capstone. “Believe me, I’ll make it work.”
Becky Coleman, a Head Start teacher at Barre with two young children, said next week’s tax credit “is going to be huge” for her family.
“Traditionally, I have used this tax refund and I wait for it every year and I have to spend it on any big purchase. Last year it was bunk beds. I had to wait to buy them bunk beds, ”she said. “But having it monthly would allow me to save more quickly and make those purchases.”
She said the first payment will likely go to a new dryer since hers recently broke. If the monthly payment system continues in the future, Coleman hopes to devote it to extracurricular activities for her children that she might not otherwise be able to afford.
Welch said he believes there is a good chance that this monthly payment system will become a permanent part of the tax code because it has received bipartisan support.
“A lot of my fellow Republicans have people for whom this makes a huge difference to their families. So it’s not about who you voted for. This is what our children need, ”Welch said. “At the end of the day, I hope we can make this permanent.”
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