The coronavirus pandemic continues to have a huge impact on the entire world. In the U.S. alone, more than 86,000 people have died, tens of millions of people have lost their jobs, and many more are watching helplessly as their financial reserves dwindle and run out. Our economy is taking a big hit. We must look for any and every way possible to remain financially stable.
To help with the financial hardships, the federal government already has approved one round of stimulus checks for a larges swath of the populace, and now, Congress is looking at new sets of proposals to further assist Americans.
In order to address those extra burdens, the latest stimulus bill from the House of Representatives — dubbed the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act for short — would take three steps to get parents more stimulus money. In addition, parents of college students would be retroactively eligible to claim the $500 per kid payment that they weren’t eligible for in the first round of stimulus checks.
People with children at home are facing added financial challenges as a result of the pandemic, especially as many day-care centers remain closed and most schools have gone to remote-only operation. In order to address those extra burdens, the latest stimulus bill from the House of Representatives — dubbed the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act for short — would take three steps to get parents more stimulus money.
1. New stimulus checks
The HEROES Act would put more money into most Americans’ pockets, but those with children would get an especially significant payout. Taxpayers would be able to claim $1,200 stimulus payments for themselves and equal payments for up to three dependents regardless of age, meaning that the maximum payment would be $6,000 for a family of five or more. That’s up from the $500 per kid that parents got under the previous stimulus bill, and it’d be subject to the same income restrictions as before.
In addition, parents of college students would be retroactively eligible to claim the $500 per kid payment that they weren’t eligible for in the first round of stimulus checks. It’s unclear whether those parents would have to wait until tax time or would be able to get direct payments sooner.
2. A bigger child tax credit
Currently, parents receive a $2,000 child tax credit for every child under 17. The HEROES Act would boost the value of that credit to $3,000, giving parents an extra $1,000 per qualifying child. Children under 6 would be eligible for an even larger $1,600 boost to $3,600.
Ordinarily, parents would have to wait until they filed their 2020 tax returns in order to benefit from the child tax credit. However, lawmakers are looking at providing monthly advances on the tax credit in order to get the money to families more quickly.
3. A bigger child and dependent care tax credit
Another credit that many parents use is the child and dependent care tax credit. Under current law, those with children under 13 can claim a credit of between 20% and 35% on up to $3,000 of qualifying expenses for one child or up to $6,000 for two or more children. The proposal would raise the maximum credit to 50% and double the amount of expenses allowed, pushing the maximum credit up from $2,100 all the way to $6,000 for some families.
In addition, all of the credit would be refundable, helping those who don’t have enough tax liability to benefit fully from the credit. Even though it would be effective only for 2020, the move would nevertheless have an immediate impact.
Don’t spend the money yet
Although the overall stimulus proposal has solid support in the House of Representatives, which voted on it on Friday, the Republican leadership in the Senate has not embraced it. Therefore, parents shouldn’t get too excited yet, as politics could get in the way of their receiving further stimulus support.
What is certain, though, is that many parents are struggling financially right now, and they’ll ask for the help they need. Tax law changes will make planning challenging through 2020, but even if the HEROES Act goes nowhere, it will nevertheless get specific ideas on the table for possible future consideration.