As a working parent with one child in daycare and another on the way, the cost of full-time childcare for two children weighs heavily on my mind pretty routinely. The cost of childcare will be twice as much as our monthly mortgage payments which is daunting to think about. So, when I heard of the child tax credit being discussed as part of the COVID-19 Relief Package, I was intrigued and hopeful that we might be some relief and those fears could be softened. When I saw the bill pass, I was grateful but I still had a lot of questions and I wondered how much of a relief would this really be for me and my family. As a working parent, are the needs of my family and our future finally being considered at a national level?
As part of the $1.9 trillion COVID-19 relief bill, the childcare tax credit for parents has been increased to $3,600 from $2,000 and many changes have been made to help reduce the financial burden of childcare. At a basic level, the Child Tax Credit is a credit that parents and caregivers can claim to help reduce their tax bill, depending on the number and ages of their dependents. For many, it may provide a much-needed source of relief as part of a 2020 tax year refund. Here is an outline of some of the changes that families will see moving forward.
- Credits increase from $2,000 to $3,600 per child under 6 and $3,000 for children older than 6.
- The credit would also be fully refundable.
- Money from the credit will be split: Half will be paid through the tax refund and the other half will be paid monthly from July to December.
- There is no $2,500 earnings floor.
Also, funding will be given to schools to reopen safely and allow for many schools around the country to return to in-classroom learning and stop using a virtual model.
While these changes will help families, especially those who are below the poverty line, we had to ask the question if this does enough to combat the current issues in the United States when it comes to the high cost of childcare and the loss of women in the workforce due to childcare issues. As we have seen over the past year, women are leaving the workforce in staggering numbers due to the stresses of virtual schooling and the high cost of childcare. Will these steps be enough to return women to the workforce and save the struggling working family?
Here are some points to consider:
These do not provide a systematic change and are short-term.
Certainly, these measures are a fabulous step forward but the tax credits and additional funding are only available in the short-term through 2021. In order to make these changes permanent a new bill would have to be negotiated and passed in 2022. Working families need systematic change that they can rely on through the hard times and the good. They also need the stability of knowing what is available to them so that they can plan accordingly.
Additional Funding Will Allow Schools Will Reopen
This pandemic has shown that brick-and-mortar schools are the backbone of childcare for older children in the United States. Many families rely on schools to educate, feed, and watch over their children while parents work. The breakdown of the US school system showed a lack of backup support which left families with few options. Schools reopening is a wonderful start to getting parents back to work but it doesn’t address the issues of a lack of other viable options besides public K-12 schools for working families.
Additional Funding Will Allow for Vaccine Distribution
The long-awaited COVID vaccine is now here and with additional funding for production and distribution, announcements have been made that enough vaccines will be available by May 2021 for each US adult to be vaccinated. This is a giant accomplishment and one that will allow parents to have more options when it comes to childcare and relieve some of the stress of sending their children to school or daycare. Knowing that education providers, daycare providers, and retired family members are vaccinated, will open up additional opportunities for childcare for working families which will help so many.
So, the relief bill is a bit of a mixed bag when it comes to helping families. On one hand, it will provide much-needed relief for working parents and families in the short term. Hopefully, this US experiment will lead to additional acceptance of expanding programs like these to include universal childcare in the future.
What can we do now? Employers don’t have to wait for the government to step in. Offering services like Flexable Virtual Childcare to your employees is a great first step in supporting working parents as we rebuild the country. Learn more here.