Billings Gazette: Montana families could begin receiving direct child payments this week
By: Tom Lutey
More than 100,000 Montana families with children could begin receiving monthly child tax credit payments as early as Thursday under a broad plan to support all but America's richest families.
It's estimated that the monthly payments, $300 for each child younger than age 6 and $250 for children ages 6 to 17, will reduce American child poverty by half. From July through December, there will be monthly payments. Come tax season next spring, parents can file for a lump sum payment covering the first six months of 2021.
"If parents are responsible, and they use the money in the right way, it means they're going to get that breakfast in the morning that maybe they weren't getting before," said U.S. Sen. Jon Tester, who supported the tax credit in the American Rescue Plan. "It means parents are going to have a little more flexibility to be with their kids and maybe not have to work that overtime shift."
There should be about 110,000 Montana tax filers who qualify. That's based on the number of individuals and couples who claimed the "child and other dependent" tax credit on their federal tax return for tax year 2018. The Montana Department of Revenue provided the data at June's end.
However, not everyone is set up to receive direct electronic payments from the IRS. Only 56% of the Montanans file taxes electronically, reports DOR's Czelsi Gómez.
Even a family that didn't pay income tax in 2020 qualifies for the credit, though they will have to get on the IRS radar, which means filing a 2020 tax return even if they have no income to claim. For parents who weren't required to file a 2020 tax return but want to receive the child tax credit, there is an online IRS tool at: www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool.
It will take some work for some people to fully participate. That's one of the things the nonprofit Montana group Zero to Five is focused on. Parents can sign up and begin thinking about ways the tax credit can benefit families, perhaps by the working with other child-specific programs being rolled out this year.
"The tax credit is universal. So, it will help a lot of children get out of poverty, but it will also help a lot of families who are just on that edge of not being able to qualify for public assistance, but are also not really making a lot. It's such a fragile point. So, hopefully this adds a little stability to family financials," said Caitlin Jensen of Zero to Five.
The group's name refers to its focus on improving a child's life from healthy pregnancies to school readiness. A big part of that focus is affordable child care, which is also a focus of Congress and the president in the first six months of President Joe Biden's administration.
The American Rescue Plan included credits to pay for child care for children younger than 13 whenever parents are working or looking for work. Babysitters, center-based child care, even child care services offered by relatives living outside the tax household are covered. A family that keeps receipts to show what it's paid for should qualify. Earlier in the year, most families also received a direct payment of $1,400 per child.
Montana may spend as much as $31 million on grants to expand child care services using federal dollars from the American Rescue Plan. There will likely be more child care investment in the second phase of the Biden infrastructure plan, which would include money for pre-kindergarten, something Montana has struggled with. The state is woefully short on child care providers. A problem before the pandemic, the shortage in child care workers has only become worse.
"The pandemic really highlighted the importance of this sector. It was hard for first responders and health care workers to go to work because it's hard to have a child care arrangement. It really highlighted the important backbone the industry plays" said Rob Grunewald, an economist with the U.S. Federal Reserve of Minneapolis, which covers a portions of six states, including Montana.
The Minneapolis Fed started studying child care in the early 2000s after it realized the extent to which child care influenced the economy. Child care did so in two ways. First by affecting a parent's ability to work and the amount of family income. Secondly, quality child care that put children on a learning path before they reached public school, also resulted in children getting better jobs with better income as adults, which improved the region's economy.
It's notable that early in the pandemic, The City of Billings converted its public library to a free child care center for the school-aged children of "essential workers" from the city's two hospitals and county health clinic. The decision speaks to the scarcity to which Grunewald referred.
Jensen said Zero to Five and other collaborators are working on a cooperative model to create reliable child care in the area where businesses, parents and other groups are too small in number to go it alone. The approach is one Tester commented on, as well, suggesting that the Montana Cooperative Development Center has what it takes to bring a co-op model to child care.
"It's a natural fit. We see in a lot of small communities where they need a grocery store, and people get together and set up a co-op instead of a grocery store. It's the same thing," Tester said. "You've got a bunch of small businesses, micro businesses that need child care for their employees, because it could be an incredible recruitment tool. I think they can combine their efforts through a pretty non-complicated co-op structure where they could they could get that thing done."