If changes to the child tax credit put forward by Democrats stick, more children than ever will be eligible for the benefit.
One major change in the current proposal is allowing children with individual taxpayer identification numbers, or ITINs, to receive the credit. These kids, who are often undocumented children growing up in the U.S., were left out of the 2017 Tax Cuts and Jobs Act.
Thus, their parents have not been able to claim the child tax credit or receive monthly payments through the enhanced benefit, as only kids with Social Security numbers have been eligible.
More from Invest in You:
How to prevent money disagreements from destroying families
The No. 1 reason people want to change careers (and it’s not pay)
Tax credits could boost refunds for low-income families this year
Including this provision going forward would restore the benefit to more than 1 million children, according to the Institute on Taxation and Economic Policy.
“These kids are who are in mixed immigrant status families will be able to benefit greatly from having these benefits just like all families,” said Ashley Burnside, a policy analyst at the Center for Law and Social Policy. “When we provide families with this additional monthly income it allows them to afford basics like food, rent and school supplies.”
A fully refundable credit
Another change that Democrats are looking to keep is full refundability. Previously, the credit was only partially refundable, meaning it would only offset taxes owed or be returned to the taxpayer in a refund if they had taxable income of about $2,500 or more on their return.
Making the credit fully refundable means that families with no taxable income, the very lowest-income ones, can receive the money. This change helped some 27 million children who previously got partial credit or missed out because their families didn’t earn enough income.
“That really affects the lowest-income families, and the research showed that [partial refundability] was part of the policy that boxed out children of color,” said Amy Matsui, director of income security and senior counsel at the National Women’s Law Center. “It is incredibly important to have that be made permanent.”
