The government is sending up to $300 monthly checks to families with kids starting today. Democrats want to make it permanent as a new form of Social Security.

Joe Biden Chuck Schumer
President Joe Biden and Senate Majority Leader Chuck Schumer.

  • The US government is poised to send the first batch of child tax credit payments on Thursday.
  • Policymakers estimate 35.2 million families could see cash deposited into their bank accounts.
  • The success of the program will determine whether Democrats can extend it as another form of Social Security.
  • See more stories on Insider’s business page.

America’s neglected social safety net could be getting its largest patch in a generation on Thursday, when the US begins a year-long experiment providing a guaranteed income for families with children. Its success will determine whether it becomes a permanent fixture.

The Internal Revenue Service is poised to send the first batch of monthly child tax credit payments stemming from President Joe Biden’s stimulus law, which was approved in March over united Republican opposition. For six months, families can get a $300 monthly benefit per child age 5 and under, amounting to $3,600 this year. The measure provides $250 each month per kid age 6 and 17, totaling $3,000. Half of the benefit will come as a tax refund.

If all goes to plan, the federal government will deposit cash directly into the bank accounts of 36.2 million families, according to projections from administration officials shared with reporters on Wednesday evening. That represents the bulk of the 39 million families the IRS has identified as being eligible for the child allowance.

Experts say the one-year child tax credit payments could shift public attitudes on cash benefits given its wide reach and mark a big step forward in slashing child poverty – some estimate it could be cut by up to half.

“It’s hard to understate the significance of this expansion for child poverty in America,” Samuel Hammond, a welfare policy expert at the center-right Niskanen Center, told Insider. “Most countries have some form of child or family allowance – and the US has been an outlier in excluding the lowest income households from our version of a child benefit,” he said, adding “once you start on this path, it’s hard to turn back.”

Some Democrats are already drawing comparisons between the program and the birth of Social Security in 1935, a milestone that set up a critical source of income for retired and disabled Americans.

“It’s the most transformative policy coming out of Washington since the days of FDR,” Sen. Cory Booker of New Jersey recently told The New York Times.

‘Some bumps in the road’

Michael Bennet Capitol Hill
Sen. Michael Bennet (D-CO), arrives for a vote in the Capitol.

Democratic lawmakers and Congressional aides have labored behind the scenes to ensure a smooth rollout of the payments. The child tax credit was revamped to include low-income families not required to file taxes, a group previously shut out from tapping into the benefit.

There were some signs of problems early on. Some experts and community groups raised concern that an IRS portal to sign up the poorest families was too complex and inaccessible for people who lacked desktop computers.

Sen. Michael Bennet of Colorado, an architect of the measure, said on Monday the IRS has given the child tax credit “100% of their attention” and said he’s regularly communicated with the agency.

Still, he cautioned there could still be some snags. The pandemic has added to the IRS’s responsibilities over the past year and strained its depleted staff. It has gone from being a tax-collecting agency to a benefit distributor on par with the Social Security Administration.

“I’m sure there will be some bumps in the road as there always are when rolling out something new like this,” he told reporters. “But it’s important as bumps arise to iron them out.”

Some of those potential problems, Bennet told Insider, include “people not getting the benefit they were supposed to receive and accounting issues that might arise. I hope they won’t be systemic issues, I don’t think they will be.”

The IRS has struggled sorting through a massive backlog of tax returns in recent months, delaying tax refunds in at least some cases. Hammond said it was unclear whether distributing monthly child benefits via the IRS is “sustainable in the long run.”

“We’ve increasingly asked the IRS to do an awful lot of social policy beyond taxing and collecting revenues, and the IRS is just not equipped to be a benefits administrator,” he said.

The future of Biden’s child allowance

joe biden
President Joe Biden makes brief remarks at the White House.

The bulked-up child tax credit is a rare measure that enjoys deep support among both House and Senate Democrats. Bennet, Sen. Sherrod Brown of Ohio, and Reps. Rosa DeLauro of Connecticut and Suzan DelBene of Washington, are among the lawmakers spearheading efforts to make it permanent.

Biden proposed in his spending plans to extend the bulked-up benefit until 2025, the same year that Trump-era tax cuts for individuals end. It’s possible Republicans could trade support to renew the pair of benefits, given the GOP is generally opposed to cash aid as a standalone measure.

“I think we should embrace allowing people to keep more of their own money, if we’re applying it towards their payroll tax,” Sen. Marco Rubio of Florida told Insider last month. Rubio and Sen. Mike Lee of Utah led efforts to double the size of the child tax credit in the 2017 Republican tax law. The pair favor boosting the benefit amount for workers.

On Wednesday, Rubio released a statement tearing into the child allowance. “The way President Biden tells it, the handout is part of his administration’s ‘pro-family’ plan,” he said. In reality, he has transformed the pro-worker, pro-family Child Tax Credit into an anti-work welfare check.”

Senate Democrats are kicking off a flurry of negotiations to finalize what measures will ultimately be included in a $3.5 trillion budget deal that would mostly be paid for with tax increases. They’ll advance it in a pathway known as reconciliation, which allows them to approve certain bills with a simple majority instead of a filibuster-proof 60 votes. Every Democrat must stick together for the budget package to clear the Senate.

Brown, the Banking Committee chairman, said talks were in their early stages so no child allowance expiration date was set. “Not clear what year yet, but it’s going to be a popular program like Social Security,” he told Insider on Wednesday. “Republicans will not only be afraid to take it away, they’ll start taking credit for it.”

He also suggested its hefty price tag could keep a permanent extension out: “I think its so costly it may not [be included], but I’m still fighting for permanence,” he said.

Brown also rejected the notion of changing the income thresholds. “I think that’s pretty locked in. We’ve all been talking about how important that is, 90% of the public getting this is really consequential and key to its popularity,” he told Insider.

Some Democratic moderates may balk at renewing the child tax credit in its current state. Sen. Joe Manchin of West Virginia, a swing vote, told Insider he was open to a permanent extension last month. Others are undecided on the program’s fate.

“I consider it not an easy issue,” Sen. Angus King of Maine, an independent who caucuses with Democrats, said in an interview. “It is a major expansion of what amounts to an entitlement program. I certainly supported it as part of the pandemic relief package. But supporting it on a permanent basis is something that I have to have more data on and understand how it’ll be paid for.”

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Parents could get a $300 check this week from the government thanks to the revamped child tax credit

Joe Biden
President Joe Biden.

  • The IRS will start sending advance child tax credit payments on July 15.
  • Monthly payments for families will be issued until December, with the remainder sent at tax time.
  • It amounts up to $300 per child, depending on the age.
  • See more stories on Insider’s business page.

The federal government is only three days away from kicking off what’s essentially a new child allowance program in the America.

It stems from a revamped child tax credit in President Joe Biden’s March stimulus law that widened the credit’s reach to families with no tax obligations, and bulked up the amount. Families can get a monthly $300 check for children ages 5 and under, and $250 for each child between 6 and 17.

The IRS noted that most families will receive the payments without having to do anything, and they should receive them through direct deposit, a paper check, or a debit card – similar to the three stimulus payments that the federal government sent over the past year.

Half of the amount will be divided into monthly payments issued from July until December. The remaining half will be provided at tax time next year. It will total $3,000 for kids between 6 and 17, and $3,600 for children under age 6.

Last month, the Internal Revenue Service (IRS) began notifying 36 million American families that they could be eligible to receive the monthly child tax credit.

Here’s when the IRS will distribute payments:

  • July 15
  • August 13
  • September 15
  • October 15
  • November 15
  • December 15

The White House estimates that 90% of families are eligible to get the credit. Researchers say it has the potential to put a major dent in child poverty as well.

Still, the IRS is scrambling to reach the lowest-income families who didn’t previously qualify for the child tax credit. At least 2.3 million children could be excluded from the child allowance, per a Treasury Department estimate.

A strong majority of Democrats in both the House and Senate are pushing to make the child tax credit changes permanent. Biden’s sprawling infrastructure package would extend it until 2025. After that, Congress would need to renew it.

“We must use this moment to pass the American Family Act and permanently expand and improve the child tax credit by increasing the benefit to families and providing payments monthly,” Chair of the House Appropriations Committee Rosa DeLauro said in a February statement. “Children and families must be able to count on this benefit long after the end of this pandemic.”

Still, some moderate Senate Democrats may push for cuts to the measure. At least one Democratic senator has expressed unease with checks going to households earning six figures.

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Why a fourth stimulus check isn’t likely anytime soon

President Joe Biden.

  • A fourth stimulus check is unlikely given the accelerating pace of the recovery.
  • For now, Democrats have moved onto addressing evictions, among other things.
  • The White House has punted the issue and said it’s up to Congress to decide.
  • See more stories on Insider’s business page.

Stimulus checks remain popular with average Americans. Congress under both the Trump and Biden administrations issued three direct payments amounting to $3,200 for millions of Americans.

However, a fourth round is unlikely to be sent anytime soon as the economy continues regaining jobs. No lawmaker in Congress has pitched a plan so far, and congressional Democrats are squarely focused on approving President Joe Biden’s infrastructure plans this summer.

“I don’t see people advocating for another check at this moment,” Mike Konczal, director of macroeconomic analysis at the left-leaning Roosevelt Institute, said in an interview. “I think the big fights are about dealing with the legacy of the pandemic, both getting vaccination rates up, dealing with evictions and foreclosures, and making sure that bottlenecks in the economy are swiftly taken care of.”

It could also crash into resistance among most Republicans and some Democrats in Congress. During negotiations for the $1.9 trillion stimulus law in March, a bloc of moderate Democrats flexed its political muscle to cut who could get a $1,400 direct payment. Centrists balked at the prospect of government cash going to households that didn’t experience job losses during the pandemic or pulled six-figure incomes.

The Biden administration has punted on whether it would back more stimulus payments, throwing the issue to lawmakers. “We’ll see what members of Congress propose, but those are not free,” White House Press Secretary Jen Psaki said at a May press conference.

A White House official told Insider that the Biden administration is “committed to providing relief to the American people to recover from the impacts of the pandemic.” The official noted the stimulus law included various measures to shore up small businesses and provide rental aid, along with an expansion of the child tax credit.

“We look forward to continuing our work with Congress to implement ARP and pass the president’s full Build Back Better agenda,” the official said, referring to the American Rescue Plan.

The bulked-up child tax credit makes up a core part of Biden’s stimulus. The law transformed it into a monthly payment of either $250 or $300 for families, depending on the child’s age. Those are poised to go out on July 15 for nearly 90% of American families.

Konczal said the child allowance is capable of stabilizing incomes and cutting hunger rates once it starts reaching families. “It’s going to expand the notion of what social insurance is meant to do in a way that is profound,” Konczal said.

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Kevin McCarthy mistakenly attributes a 19-year-old’s poster promoting the child tax credit to the IRS

Kevin McCarthy
House Minority Leader Kevin McCarthy of California.

  • Kevin McCarthy criticized the IRS for wasting taxpayer dollars on a poster promoting the child tax credit.
  • But 19-year-old college student Tobin Stone actually made the poster – not the IRS.
  • Democrats are pushing for an expansion of the credit while GOP members largely oppose it.
  • See more stories on Insider’s business page.

House Minority Leader Kevin McCarthy blamed the Internal Revenue Service (IRS) for wasting taxpayer dollars on a poster promoting the child tax credit. But the IRS actually didn’t make the poster – a 19-year-old college student did.

In a now-deleted Facebook post on Wednesday, McCarthy posted a photo of a poster that college student Tobin Stone created promoting the child tax credit, which is a monthly credit given to families with children. McCarthy attributed the poster to the IRS, though, and criticized the agency for wasting taxpayer dollars on a “government handout.”

“Infuriating,” McCarthy wrote. “The IRS is literally spending taxpayer money to advertise a government handout. This is welfare without the work requirements.”

Stone, a political science and public policy student at Albright College in Pennsylvania, told Forbes he’s been a “big fan” of the child tax credit ever since it was introduced, which is why he created the poster that he first tweeted out in April.

McCarthy has not yet publicly commented on mistakenly attributing the poster to the IRS, but some Democrats were quick to notice the minority leader’s error. Rep. Don Beyer of Virginia, for example, wrote on Twitter that the “IRS had nothing to do with [the poster], but the enhanced Child Tax Credit WILL put money in the pockets of working families, no thanks to @GOPLeader who voted against it.”

Beyer’s is referring to President Joe Biden’s $1.9 trillion stimulus law, which increased the child tax credit’s amount to $3,600 per child age 5 and under, and $3,000 for every kid between 6 and 17. It gives families the option to receive a monthly payment of $250 or $300 depending on each child’s age, and individuals earning below $75,000 and couples making under $150,000 qualify for the full checks.

Not a single Republican voted for Biden’s stimulus law, but even so, some Republicans, including McCarthy, have been promoting elements of it.

With regard to the child tax credit, Insider’s Joseph Zeballos-Roig reported earlier this month that some centrist senators might stand in the way of a permanent expansion of the credit, which 41 Democratic senators had previously called for.

But Colorado Sen. Michael Bennet, one of the architects of the credit, told Insider he had spoken to some moderates and continues to stress the benefits it will have on American families.

“It’s going to be an amazing moment in modern America where people actually see themselves and their families benefiting dramatically from something that we’ve done in Washington DC,” Bennet said in an interview. “It’s going to make a huge difference to people.”

McCarthy’s office did not immediately respond to Insider’s request for comment.

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Expansions of the Child Tax Credit and Earned Income Tax Credit were an important move, but they are only temporary and leave out too many Americans in need

Biden signs American Rescue Plan
US President Joe Biden signs the American Rescue Plan on March 11, 2021, in the Oval Office of the White House in Washington, DC.

  • Expansions of the EITC and CTC were implemented as part of the American Rescue Plan Act.
  • As of now, these expansions are temporary and only apply to the current tax year.
  • Many needy Americans were ineligible or weren’t aware of actions they need to take to claim these credits.
  • Bobbi Dempsey is a freelance writer, economic justice fellow at Community Change, and reporting fellow at Economic Hardship Reporting Project.
  • This is an opinion column. The thoughts expressed are those of the author.
  • See more stories on Insider’s business page.

The American Rescue Plan Act signed by President Biden in March included a range of major actions and initiatives designed to provide immediate, significant economic relief to the many Americans struggling through financial hardships related to the pandemic.

Chief among those is a pair of tax credits that has been greatly enhanced and expanded: the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC).

These tax credit expansions should provide much-needed but temporary relief to needy Americans – but there were some critical flaws in the implementation and execution that may leave some eligible recipients shortchanged or left out completely, while other disadvantaged US families weren’t eligible at all.

The basics of the tax credit expansions

The Child Tax Credit actions make the credit fully refundable – meaning, if the tax credit is more than a household’s tax liability, they will get the excess back as a refund – while also increasing the amount families receive and getting rid of the work requirement. Eligible families will start seeing the impact of the CTC changes quickly, as advance payments will start reaching these families in monthly increments beginning in July and running through the end of the year.

The expansion of the Earned Income Tax Credit will especially help childless Americans, generally meaning people who do not have any children who could be claimed as dependents, who are living below or near the poverty line.

The act raises the maximum EITC for childless adults from around $530 to roughly $1,500. It also expands the age range of childless workers eligible for the tax credit.

Those who benefit from these credits urgently need this support, which will offer a bit of relief to help them keep their heads above water financially. While my household doesn’t currently include any dependent children, it does contain several adults who will benefit from the expanded EITC.

Some major pitfalls

These tax credit expansions were a good first step, but in their current form, they fall woefully short. For one, the expansions are temporary. As of now, the actions are only effective for the 2021 tax year. There is reason to hope that may change, though. In late March, dozens of Democratic senators sent a letter to President Biden urging him to make the changes to the CTC and EITC permanent.

Another issue is that eligible people who fail to file a tax return will miss out. People need to file their taxes in order to receive these credits. This is true even for those who otherwise normally would not need to submit a tax return because they have no tax liability.

This requirement is most likely to trip up adults without dependent children and with little taxable income because they might not be required to file a tax return and may be unaware that by failing to file they lose out on this refundable credit.

By contrast, taxpayers with dependent children are more likely to already be in the habit of regularly filing an annual tax return – even if they have minimal taxable income – in order to take advantage of credits and other tax breaks they would get routinely, during pre-pandemic times. But those parents who didn’t file a 2019 or 2020 return won’t receive any of the money from this credit until after filing their 2021 return next year – meaning they won’t get the advance payments this summer.

I’m not sure the government and organizations that serve low-income populations have done a sufficient job of educating people about these credits, how the process works, and why it’s important for them to file a tax return even if they normally wouldn’t.

I suspect that some people may assume that the government will simply send them a check or find some other way to get this money to them, similar to the process for distributing stimulus payments. Unfortunately, that is not the case. Tax credits are tied to tax returns and are disbursed through a process that is triggered by the filing of a tax return. Those who don’t file a tax return will simply miss out.

Also, a large number of immigrant or “mixed status” families are ineligible. Under current federal law, all household members listed on the tax return must have a Social Security number in order for the family to be eligible for the EITC. An Individual Taxpayer Identification Number – an identifying number used solely for tax purposes that is assigned to people who cannot obtain a Social Security number, such as non-citizens and undocumented immigrants – is not sufficient. If even one person on the tax return lacks a Social Security number, all members of the tax household are ineligible. This will impact many mixed status families.

A good first step, but a long way to go

These temporary expansions will definitely make a difference for these eligible families who are able to complete the steps necessary to receive them. But this is a limited, short-lived solution for a long-term problem. I’m hoping that seeing the positive impact on those who benefit from these expansions will motivate lawmakers to correct the shortfalls and inadequacies – and then make those improved actions permanent.

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Survivors of domestic violence call on the IRS to recognize financial abuse and help them combat it

domestic violence
  • Lawmakers and domestic violence survivors told Insider the IRS isn’t doing enough to support victims of financial abuse.
  • About 99% of domestic violence survivors experience financial abuse, according to experts.
  • Over the course of the pandemic, abusers pocketed stimulus checks and might direct much-needed child tax credits to their own accounts.
  • See more stories on Insider’s business page.

For almost a year, Democratic and Republican lawmakers have been calling on the IRS to make it easier for domestic violence survivors to collect stimulus checks and tax returns.

Experts say almost all domestic violence survivors experience some form of financial or economic abuse, and lawmakers and IRS representatives continue to hold conversations about ways to prevent it.

But the two parties seem to be at odds. So far, the IRS has not sufficiently delivered on pleas to streamline filing processes, lawmakers and survivors of domestic violence said in interviews and emails with Insider.

Instead, stimulus checks and tax returns designated for survivors have gone straight to their abusers. And now, following President Joe Biden’s announcement that child tax credits are slated for rollout beginning July 15, survivors taking care of children worry their abusers will pocket that money as well.

Rimsha, a 28-year-old survivor who requested her last name be withheld due to safety concerns, said she hasn’t received any of the three stimulus checks Congress approved to offset the financial difficulties brought on by the pandemic. Her abuser filed his tax return jointly without her consent and collected them all instead, she told Insider.

Biden’s child tax credit announcement “makes me more anxious,” Rimsha said. “I’m actually more frustrated. Okay, IRS, you’re going to send that to my husband as well?”

Domestic violence survivors like Rimsha often double as caregivers who, over the past year, have had to adapt to inconvenient circumstances like remote learning while trying to earn a living and support their children.

Adding to the stress of making ends meet, the pandemic has exacerbated the financial abuse nearly all domestic violence survivors endure. Since the start of the pandemic in March 2020, abusers have had more opportunities to pocket money that’s not theirs.

While missing out on supplemental income like stimulus checks or child tax credits, survivors also have to navigate tax season.

Even before the pandemic, abusers often tried to claim children on their tax returns to get more money back from the government, according to Teal Inzunza, program director for Economic Empowerment at the Urban Resource Institute, a nonprofit that provides services to domestic violence survivors. But as the country begins to reopen fully and slowly recovers from the economic recession, that extra financial support is more crucial than ever to survivors, experts say.

“Abusers will often fraudulently sign and claim the survivor on their tax return, therefore making it so that the survivor doesn’t have access to really necessary refunds or tax return information,” Inzunza said.

In attempts to get the stimulus checks she’s owed and ensure that all other funds like child tax credits are directed to her account, Rimsha has repeatedly engaged with IRS representatives.

So far, no one has been able to help her, she said.

IRS reps on the phone have used her husband’s joint tax filing as a justification for the issues Rimsha’s facing, she said, adding that she’s even provided the agency with copies of restraining orders against him to explain her case and separate her filings from his.

“It makes me upset,” she said. “Why are the abusers getting away with this?”

Because of the abuse she’s endured, Rimsha has been diagnosed with PTSD, she said.

A congressional push to derail abusers

In a June 2020 letter to the IRS, Democratic lawmakers outlined a series of changes the agency could implement to make it harder for abusers to gain access to accounts and private information that do not belong to them.

That letter, though nearly a year old, reflects many of the same struggles domestic violence survivors still deal with today.

Among the changes recommended was the implementation of a dedicated phone line that survivors could call to report address changes, and the creation of an individual PIN that would heighten security measures and prohibit abusers from accessing or changing their partner’s information. There’s also a suggestion to add information to aid survivors like Rimsha who filed a joint tax return but are no longer with their spouses.

These changes, several lawmakers told Insider, have not been adequately addressed or implemented. And as a result, there will be survivors at risk of losing child tax credits, among other financial support, the lawmakers behind that letter told Insider.

“Right now, these benefits are at risk of being stolen by their abuser unless the IRS takes additional concrete steps to support survivors of domestic violence,” the office of Sen. Sherrod Brown said to Insider in an email.

The changes outlined in the letter remain pertinent today, almost a year after it was sent off to the IRS, lawmakers argue. Sen. Chris Van Hollen of Maryland told Insider changes to the way the IRS collects taxpayer information are needed to ensure survivors have access to “crucial resources” that make it easier for them to keep their information secure and out of the hands of their abusers.

Van Hollen’s office said the senator plans to follow up with the IRS to urge the agency to better support survivors of domestic violence, especially when it comes to financial abuse, a topic less commonly known, but widely prevalent.

About 99% of domestic violence survivors experience financial abuse, according to Blair Dorosh-Walther, program manager of economic empowerment at Safe Horizon, a New York-based nonprofit dedicated to providing resources to survivors.

“The average survivor carries over $103,000 worth of debt throughout their lifetime due to the abuse,” Dorosh-Walther said. “This leaves taxpayers with an annual cost of $3.6 trillion due to domestic violence, which is higher than some countries’ GDP.”

Other lawmakers, like Sen. Cortes Masto of Nevada who led the June 2020 letter, said they also plan to continue advocating for survivors to minimize economic abuse. Her office is collaborating with the IRS on ways to revamp the agency’s systems so they benefit survivors over abusers.

“I have consistently called on the IRS to make sure their systems are working” to address economic abuse, Cortes Masto told Insider. “There are clear steps the IRS can take to make sure that survivors can receive the stimulus payments they are owed, and I’m going to keep pushing to make sure they do so.”

Other senators are taking different approaches. Sen. Bob Casey of Pennsylvania, for example, is working on moving a bill through the Senate that “would reauthorize and improve a federal funding program which lapsed six years ago,” his office said.

“Through grants to states, tribal governments, and territories, survivors would receive services such as emergency shelter, crisis counseling, safety planning, and assistance recovering from financial abuse and housing insecurity,” his office told Insider.

The IRS did not respond to a request for comment.

Financial abuse takes many different forms

Sara Gardner, 29, considers herself both a survivor and an ally to people who’ve experienced domestic violence and financial abuse.

As a kid, her stepdad made large purchases under the guise of supporting Gardner, her mom, and younger sister.

“Growing up, it would be like, why are we not getting groceries but we bought a car? Or a new truck for my stepdad?” Gardner told Insider.

Her mom was always the parent who took care of tax filings, while her stepdad refused to contribute his portion. Only when lawmakers passed the first stimulus relief fund offering Americans $1,200 checks did her stepdad decide to contribute his information and file taxes, Gardner said. That’s when her mom learned he owed over $15,000 in federal and state taxes, Gardner said.

The anxiety of having to deal with that debt got to her.

“I cannot pay over $15,000 back to the government,” Gardner said her mom told her. “I don’t have that.”

Late last year, Gardner’s mom called while her husband was away on business and told her she had to leave him before he returned. Her mom has Parkinson’s disease and is immunocompromised, meaning she had to find isolated shelter where she wouldn’t run the risk of getting sick with COVID-19.

Having that much debt made her mom feel isolated and drove her to consider pursuing suspicious tax services that promised to “stop IRS debt,” Gardner said. Her mom’s credit score had dropped over 100 points, Gardner said.

After she left her husband, Gardner’s mom continued to receive stimulus checks, but they were written out to both her and her abuser because the IRS had their joint tax information on file. That meant both of them had to sign the check in order for the money to be deposited. Gardner’s mom didn’t want to see her abuser, and the onus fell on her to find a way to deposit the check safely and without meeting up with him.

She called the IRS, Gardner said, but a representative was unhelpful, telling her the agency couldn’t do anything since the two parents filed together. Ultimately, Gardner’s mom ended up calling their local bank and asking whether she could come in to sign the check separately from her now-ex-husband. She had to deceive him and promise she’d be there to sign the check with him, Gardner said.

She was able to connect her mom to a shelter program that advocated for her and helped her find a place.

But the financial abuse has left lingering emotional scars, Gardner said.

Her mom, for example, is afraid to spend money on anything other than bills. Because of the fear of going into further debt and losing control of her finances once more, her mom avoids spending leisurely or on personal items whenever possible.

“I buy her a grocery store gift card or a meal or a massage” as gifts, Gardner said, because she knows she will usually try not to buy these things on her own.

Money and personal finances can easily tie into feelings of self-worth and self-validation, experts told Insider. And events like tax season and periods of time that come with financial uncertainty like this pandemic can be major trigger points for survivors of domestic violence who’ve experienced economic abuse.

“With taxes, with credit reports, and then with the stimulus check, it’s just this ongoing reminder of the abuse,” Dorosh-Walther of Safe Horizon told Insider.

In Gardner’s case, her mom is “optimistic” about her future.

“I think she’s really looking forward to filing alone, to having a much more simple return,” Gardner said.

Read the original article on Business Insider

Move aside, hot vax summer. Biden is bringing hot tax summer to the US.

Felipe Castro holds a sign advertising a tax-preparation office for people who still need help completing their taxes before the IRS deadline on April 14, 2010, in Miami.
Felipe Castro holds a sign advertising a tax-preparation office for people who still need help completing their taxes before the IRS deadline on April 14, 2010, in Miami.

  • This summer everyone in Washington will be talking about taxes, while parents will get a tax credit.
  • Biden wants to raise taxes to pay for a huge infrastructure bill that may be ready in July.
  • Meanwhile, millions of American parents will start getting checks from Biden’s expanded tax credit.
  • See more stories on Insider’s business page.

You’ve probably heard that it’s hot vax summer. Vaccination rates have climbed, mask mandates are lifting, and Americans are slowly starting to venture into the first semblance of the After Times. In anticipation of the US fully reopening, cooped-up Americans are buying new going-out clothes and getting ready for the intimacy they put on pause. Even brands are getting thirsty.

But another thing will be heating up this summer: tax policy. President Joe Biden has already shepherded a law through Congress that will change the tax code (for a few years) to send monthly checks to American families, and he’s hard at work on another that would raise taxes on corporations and families earning more than $400,000 a year.

The tax-credit checks will start going out in July, just when Speaker Nancy Pelosi has vowed to deliver Biden his infrastructure bill in the House.

The stakes are scorchingly high, because despite the reopening economy, the pandemic exacerbated preexisting inequalities, while millions of Americans remain unemployed and April’s surprisingly dismal jobs report showed an uneven labor-force recovery.

Enter the hot tax summer.

Biden wants to raise taxes on the wealthy and corporations to offset massive infrastructure spending

Some of the country’s highest earners will see tax increases if Biden gets his way. He’s proposed increasing the income tax rate to 39.6% for Americans earning over $400,000, and raising the capital gains rate to the same level.

That increase – targeted only at Americans earning $1 million or more – would hit wealthy investors who get the bulk of their income from assets like stocks. The capital gains rate is generally lower than the rate that income is taxed at. As Insider’s Liz Knueven reported, the change would affect just about 0.4% of American taxpayers.

Overall, only the top 1% of filers would be affected and have to pay $100,000 more a year in taxes.

“This is about making the average multimillionaire pay just a fair share,” Biden said in a fiery speech defending the increases. “It’s not going to affect their standard of living a little bit.”

Significantly, Biden also wants to close up some tax-code loopholes and to ramp up tax enforcement on the wealthiest American, who have been found to hide billions in income from the IRS. The IRS estimates that there’s a tax gap of $441 billion a year. But Charles Rettig, the agency’s commissioner, has told Congress that the number could actually be over $1 trillion.

The gap between taxes owed and taxes paid could grow only if left untouched, according to the Department of Treasury. Treasury estimates that Biden’s proposed $80 billion investment in the IRS could bring in an additional $700 billion over 10 years. That would still leave hundreds of billions in taxes going uncollected each year, as Insider’s Ayelet Sheffey reported.

Biden’s also proposed raising taxes on corporations, aiming to bring the corporate tax rate up to 28% from 21%, though it will likely end up closer to the international average rate of 25%.

Meanwhile, an expanded tax credit will start putting checks into families’ pockets

Regardless of what happens with the infrastructure negotiations, many Americans will start feeling the effects of new Biden tax policies this summer.

Beginning July 15, families will start receiving monthly checks of up $300 from the IRS. Every 15th of the month for the next year – unless it falls on a holiday – checks will come. Those checks come from the expansion of the child tax credit, which was revamped under Biden’s $1.9 trillion American Rescue Plan.

One of Biden’s proposals in the American Families Plan is extending those checks through 2025 (many Democrats want to make them permanent). The checks are, as Insider’s Aria Bendix reported, essentially akin to basic income, and most children in the United States are set to benefit from then.

Low-earning Americans will also see an income boost from the expanded Earned Income Tax Credit, which subsidizes wages. According to an analysis from the left-leaning Center on Budget Policy and Priorities, over 17 million adults will now be eligible for an expanded subsidy.

Biden’s proposed tax increases are already seeing pushback. Some businesses have come out against the corporate increase, and there’s likely to be a lot of back and forth over what can and cannot be included in Biden’s two-pronged infrastructure package.

As Politico reported, lobbyists and executives think that they’ll be able to kill off many of the tax hikes that the president is putting forward. That could put some of Biden’s promises in jeopardy.

So while it’s not clear what, exactly, taxes will look like on the other side of all of this, they’re already in the spotlight – and they’ll probably only become a hotter topic as the temperature goes up this summer.

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Biden administration to kickstart $300 monthly child tax credit checks to parents on July 15

Joe Biden
President Joe Biden at the White House.

  • The Biden administration said it would start issuing advanced child tax credit payments on July 15.
  • It would be issued the 15th of every month unless it falls on a holiday.
  • Treasury and IRS estimate 39 million households will receive the cash without needing to sign up for it.
  • See more stories on Insider’s business page.

The Biden administration announced Monday it is kickstarting the first advanced payments of the child tax credit on July 15. Democrats have touted it as a key part of President Joe Biden’s stimulus law and it’s poised to benefit the vast majority of American children.

The Treasury Department and IRS announced they would start issuing the payments on July 15 and continue them on the 15th of each month, unless it falls on a holiday.

“The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children. With today’s announcement, about 90% of families with children will get this new tax relief automatically, starting in July,” Biden said in a statement.

The $1.9 trillion stimulus law revamped the existing $2,000 child tax credit, widening its reach and beefing up the amount. It was boosted to $3,600 per young child aged 5 and under, and $3,000 for every child between 6 and 17. It also provides households the option to receive a monthly $250 or $300 payment instead of a one-time sum at tax time, the typical way of accessing it up to now.

Families with children can tap into the cash even if they have little or no income tax obligations. The Treasury and IRS said 39 million households will receive the payments with no additional action necessary as either a direct deposit, paper check, or debit card.

The president has urged Congress to swiftly approve the $1.8 trillion economic package called the American Families Plan, the second major infrastructure plan. The proposal would extend the monthly $300 checks for another four years until 2025. But it would continue at a lower amount if lawmakers don’t renew it at the bulked-up levels.

Experts are projecting the expanded tax credit would cut child poverty in half, particularly for Black and Latino kids. The non-partisan Tax Policy Center forecasted in March that over 90% of families with kids would receive an average $4,380 cash benefit.

“I think it’s about time we start giving tax breaks and tax credits to working-class families and middle-class families instead of just the very wealthy,” Biden said earlier this month.

The IRS had said it was on track to begin the stimulus child tax credit payments in July.

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Mitch McConnell draws a red line at $600 billion for infrastructure and jobs – and says Trump tax cuts are off-limits

Senate Minority Leader Mitch McConnell (R-KY).

  • McConnell said the GOP won’t cut a deal with Biden above $600 billion on a jobs package.
  • He said there would be “zero” Republican support for Biden’s $4 trillion pair of spending packages.
  • Biden has proposed two packages with trillions of spending on physical and social infrastructure.
  • See more stories on Insider’s business page.

Senate Minority Leader Mitch McConnell drew a $600 billion red line for an infrastructure and jobs plan on Monday, an amount less than a fifth of the $4 trillion in economic spending plans that President Joe Biden has unveiled.

“We’re open to doing a roughly $600 billion package, which deals with what all of us agree is infrastructure and to talk about how to pay for that in any way other than reopening the 2017 tax reform bill,” he said at a press conference at Louisville, Kentucky.

The Senate’s top Republican flatly rejected going above the $600 billion price tag, saying “if it’s going to be about infrastructure, let’s make it about infrastructure.”

“I don’t think there will be any Republican support – none, zero – for the $4.1 trillion grab-bag, which has infrastructure in it but a whole lot of other stuff,” McConnell said. He also ruled out adjusting President Donald Trump’s tax law, a measure Biden wants to roll back to pay for his plans.

“We’re not going to revisit the 2017 tax bill,” he said. “We’re happy to look for traditional infrastructure pay-fors, which means the users participate.”

McConnell’s comments underscore the wide bridge between Republicans and Democrats on their economic priorities. Their ability to cut a deal will depend whether they can agree on methods to finance a package as well as its overall scope. Democrats are calling for aggressive spending while Republicans insist on narrowing a package’s focus.

Biden has rolled out $4 trillion in a pair of economic plans to shore up physical infrastructure such as roads and bridges, as well as manufacturing and broadband. His latest $1.8 trillion plan unveiled Wednesday would establish paid family and medical leave, universal Pre-K, tuition-free community college, and monthly cash payments for parents.

Biden has proposed lifting the corporate tax rate to 28% from 21% to cover part of the spending, a step that has strong backing among many Democrats.

A group of Senate Republicans led by Sen. Shelley Moore Capito of West Virginia unveiled a $568 billion infrastructure plan late last month. Much of that spending would directed towards areas Republicans strongly favor, such as roads and bridges, ports, waterways, and expanded broadband.

Capito and Biden spoke on Thursday in what she described as a “constructive and substantive call” on Twitter.

“We’re working with the White House, and I think it’s been very open-door, we’ve been very encouraged to keep moving forward, and that’s what we’re going to do,” she told Fox News on Sunday. Capito floated user-fees and repurposing unspent stimulus aid provided to state and local governments as a means of paying for the plan.

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Biden is betting big with plans to remake America. Here are 6 takeaways from Biden’s speech.

  • President Joe Biden delivered his first speech to a joint session of Congress on Wednesday night.
  • Biden called for an ambitious pandemic economic recovery plan focused on jobs, infrastructure, and childcare.
  • He also called for changes to immigration and foreign policy and asked the Senate to pass civil rights legislation.
  • See more stories on Insider’s business page.

President Joe Biden delivered his first speech to a joint session of Congress on Wednesday night, on the eve of his 100th day in office.

In his address before a pared-down audience due to the pandemic, Biden called for an ambitious pandemic economic recovery plan focused on jobs, infrastructure, childcare, and education. The proposals are some of the most progressive in decades – and ones unlikely to garner Republican support, as evidenced by GOP reactions in the chamber and on Twitter.

He also called for changes to immigration and foreign policy and asked the Senate to pass signature civil rights legislation – including police reform and voting rights legislation.

Here are the biggest takeaways from the speech.

Biden is betting big with his spending plans

Biden detailed an ambitious $4 trillion spending program focused on overhauling the American economy and recasting the role of government to better secure the welfare of families.

He’s fresh off the passage of a $1.9 trillion stimulus law in March, a measure broadly popular with American voters in part due to the $1,400 direct payments. He touted the federal checks and said the law contributed to a fall in hunger.

Biden quickly pivoted to his latest pair of economic plans, one to upgrade physical infrastructure and the other meant to level the playing field for middle and low-income families. The latest is a $1.8 trillion economic plan aimed at setting up sweeping new federal programs in education, childcare, and healthcare.

“These are the investments we make together, as one country, and that only government can make,” Biden said. “Time and again, they propel us into the future.”

Republicans are very unlikely to support the newest “American Families Plan” proposal. “There are individual components that conservatives might be more supportive, but the full $2 trillion package financed by big new taxes is absolutely a non-starter for Republicans,” Brian Riedl, a budget expert at the right-leaning Manhattan Institute, said.

The president also called on Congress to move on healthcare reform and raising the minimum wage

Biden urged Congress to raise the federal minimum wage, which hasn’t budged since 2009. “No one should work 40 hours a week and still live below the poverty line,” he said.

Democrats are united on raising the minimum wage but sharply disagree on the amount. Some like Sen. Bernie Sanders are pushing $15 an hour minimum wage, but others like Sen. Joe Manchin support a lower amount.

Biden also called lawmakers to step in and lower prescription drug costs, an initiative reportedly scrapped from his economic package.

“Let’s do what we’ve always talked about,” the president said. “Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower prices for prescription drugs. ”

Instead, he’s proposed extending health insurance subsidies for the Affordable Care Act as part of his spending programs.

He also threw his support behind the PRO Act, a bill designed to make it easier for workers to unionize. It has stalled in the Senate, unable to cross the 60-vote threshold known as the filibuster.

Biden talks immigration – but not the border

Biden also again called on Congress to pass comprehensive immigration reform, stressing the need to provide a pathway to legal status for millions of undocumented people in the United States – stressing that this was a bipartisan goal.

“Let’s end our exhausting war over immigration,” he said. “For more than 30 years, politicians have talked about immigration reform and done nothing about it. It’s time to fix it.”

The day he took office, Biden unveiled a proposal that would grant permanent residency to many migrant farm workers and citizenship for those who came to the US as children. On Wednesday, Biden said Congress should work to make those specific provisions law right away, acknowledging the difficulty of passing more robust reform in a 50-50 Senate.

“Congress needs to pass legislation this year to finally secure protection for the Dreamers – the young people who have only known America as their home,” he said. He also called for legislation to grant “permanent protections for immigrants on temporary protected status” and a process for granting citizenship to “farmworkers who put food on our tables.”

Biden did not, however, speak to the current status of US borders, which remain shuttered to all but unaccompanied minors – a recent influx of whom overwhelmed authorities, who have since scrambled to convert hotels and convention centers into holding facilities. The Biden administration continues to expel other asylum-seekers fleeing poverty and violence in the Americas, citing the pandemic and the need to rebuild a processing system decimated by the last White House.

Biden laid out a foreign policy plan that differs from the Trump doctrine

During his address, Biden’s focus on foreign policy centered mainly around strengthening the US’ relationship with allies and forging working but stern relations with Russia and China.

Biden said that in approaching foreign policy, his administration would operate on the belief that, “America is the most unique idea in history.”

In a contrast to Trump, Biden directly charged Russia for interference in the 2016 elections as well as the recent SolarWinds cyberattacks which breached government and private business systems.

The President added that in conversations with his Russian counterpart, he has “made clear,” to Vladimir Putin that the US will not seek escalation, but Russia’s, “actions will have consequences.” Biden added that the US and Russian should cooperate when interests are aligned.

Biden added that he had held hours-long conversations with Chinese President Xi Jinping and put forth a similar balance. The President also singled out Iran and North Korea’s nuclear programs, describing them as threats, but committed to working with allies and both nations through “diplomacy and stern deterrence.”

He also spoke about his promise to end the “forever war in Afghanistan,” acknowledging and justifying the US’ long footprint in the country. Saying that the US fulfilled their promise to bring Osama Bin Laden to the “gates of hell,” and that soldiers are serving in “the same war zone as their parents,” he said it’s time to bring troops home.

Biden addressed gun control policy and urged congressional action against gun violence in the US

During his address to Congress, the president called gun violence an “epidemic in America,” mentioning how the flag at the White House flew half-staff to mourn the lives lost at the Atlanta-area shootings and mass shooting in Colorado.

“In the week between those mass shootings, more than 250 other Americans were shot dead. 250 shot dead,” Biden said.

He touted his executive actions on guns following those tragedies but called for the Senate to act.

Biden called upon Senate Republicans to join Democratic members of Congress to “close loopholes and require background checks to purchase a gun” – such as the “boyfriend” loophole, which refers to a gap in gun legislation that allows partners convicted of domestic violence to purchase a firearm if their partner was not a spouse, didn’t have children with them, or live with them at any point.”

I will do everything in my power to protect the American people from this epidemic of gun violence,” he said. “But it’s time for Congress to act as well.”

The president called on the Senate to pass two pieces of civil rights legislation

Biden recalled meeting Gianna Floyd, the daughter of George Floyd, during her father’s funeral last year, saying how she was right in saying her father “changed the world” in light of the guilty verdict of ex-Minneapolis police officer Derek Chauvin in Floyd’s killing.

While he recognized that “most men and women in uniform wear their badge and serve their communities honorably,” the president urged Americans to come together to “rebuild trust between law enforcement and the people they serve” and “root out systemic racism in our criminal justice system.”

He urged lawmakers to pass the police reform bill named after Floyd by the first anniversary of Floyd’s death on May 25.

The president also cajoled the Senate to pass the John R. Lewis Voting Rights Act, which has already passed in the House.

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