1.1 million Minnesota children could qualify for expanded tax credit

Brianna Roan has clipped coupons and relied on free meals from her three sons' schools to feed them while distance learning at home. Then there are the constant expenses, like special $70 shoes for her 15-month-old daughter with spina bifida.

Normally, it would take the Fridley mom up to a month to afford to fix the flat tire she got the other week. But her stimulus payment arrived just in time. And as soon as July, Roan could start getting monthly checks for her four children. They're among an estimated 1.126 million Minnesota kids to benefit from an expanded child tax credit in the recent $1.9 trillion federal stimulus package.

The benefit marks a monumental policy shift, inching the country closer to a guaranteed universal income — at least temporarily. An estimated 88% of children in Minnesota under age 18 will benefit, according to the left-leaning Center on Budget and Policy Priorities.

"This will help us be able to start a savings, and get the things that I need for them," said Roan.

Families will get $3,600 for each child 5 and younger, and $3,000 for children 6 to 17. From July through December, people should get monthly checks for each child: $300 for the younger ones, $250 for older kids. However, the Internal Revenue Service commissioner warned Thursday that a tax backlog and delayed filing deadline might push back that July start date.

The other half of the money that isn't disbursed by check will be available for people to claim when they file their 2021 tax returns next year. The expansion of the child tax credit is set to end after that.

"The child tax credit is so powerful for lifting children out of poverty," said U.S. Sen. Tina Smith. The tax credit, along with other elements of the latest stimulus package, could cut the child poverty rate in the U.S. from 13.5 to 5.9%, according to Columbia University's Center on Poverty and Social Policy.

"Now, the challenge is going to be how to figure out how to make that permanent," said the Minnesota Democrat.

The child tax credit could be continued as part of President Joe Biden's next big spending bill, which is focused on infrastructure, predicted David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution.

"It's really hard for me to imagine they are going to let this expire before the 2022 midterm elections. They will find some way to extend it at least a year, and I expect longer," he said. The tax credit expansion "hitched a ride on the COVID relief train," Wessel said, but the change has been in the works for years.

The child tax credit was enacted in 1997 and last adjusted in former President Donald Trump's 2017 tax overhaul. That law doubled the credit to $2,000 a year and made it available to wealthier Americans, with married parents making up to $400,000 and single parents earning as much as $200,000 qualifying for the full amount.

Republican U.S. Rep. Tom Emmer said in a statement that he supported the 2017 change. He said he remains "willing to work with members on both sides of the aisle to further strengthen the credit and help families recover from the COVID-19 outbreak."

Smith said she is hopeful the policy will improve children's lives and leave lawmakers asking, "Why would we roll this back? Why would we change a policy so that children are going to fall back into poverty again?"

The latest changes raise the amount per child, though not all families qualify for the full increase. A single parent making more than $75,000 and married couples earning more than $150,000 would get smaller benefits.

The expansion also makes 17-year-olds eligible for the credit and allows families earning less than $2,500 — who previously did not qualify — to get the money. And it makes the tax credit fully refundable, which means if the credit is more than what someone owes in taxes, the IRS will refund the balance.

For many financially struggling families, a key change is the shift to advance payments once a month. Parents said that will make it easier to plan and also to address immediate financial challenges. If Congress continues the expanded credit, Smith said she wants the money to be available every month instead of having half of it disbursed after people file tax returns.

Tonya Holden of Circle Pines said the monthly checks will help her manage utility bills and the constant expenses that come with raising five children between 2 and 14 years old. Holden said her husband was the family's breadwinner until he left them in 2018.

She is partly blind in her left eye and deaf in her left ear, which she said limits her job prospects, as do the demands of raising five kids. But she is taking psychology classes and hopes to get a job as a high school counselor once her children get a little older.

Cash aid programs are not a work disincentive for parents like her, Holden said, "Not for people that work hard and want to provide for their children, and do anything it would take to provide." And the child tax credit, unlike some other forms of assistance, does not have a steep drop-off if someone's income climbs.

Holden would like Congress to make the expansion permanent.

"My hope is to save money. My hope is to put my children in a better place," she said, "to make sure I put away money for college, put away money just for necessities."

In Minnesota, the expanded credit is estimated to lift 44,000 children above the poverty line and bring another 41,000 closer to that mark, according to the Center on Budget and Policy Priorities. The poverty line is $26,500 for a family of four.

Canada and a number of European countries offer similar benefits to families with children.

The move is a fundamental shift in how the nation thinks about supporting families, and in Minnesota it could have a lasting impact on inequities between white children and those in minority groups, said Bharti Wahi, executive director of the nonprofit Children's Defense Fund in Minnesota. She said the country has long decided education is a public good and pools money to pay for it, and this tax credit similarly puts collective resources toward ensuring families can support kids.

"The child tax credit has the opportunity to really say something: that the raising and the care of children is in the public interest. It is not just in the interest of, and sole responsibility of, families," Wahi said. "That is — to a certain extent — a renegotiation of the way that we think about the social contract for children."

Staff writer Briana Bierschbach contributed to this report.

Jessie Van Berkel • 651-925-5044