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The Child Tax Credit Helps Grandparents Raising Their Grandchildren

Senior couple sitting in the garden with their baby grandson, smiling at him, front view

The number of grandparents caring for grandchildren is significant and continues to grow. In general, the reasons include the opioid crisis, increasing gas prices and rising inflation.

Many grandparents will tell you that their lives have been enhanced by providing full-time care to their grandchildren. But caring for a child is expensive. Just like parents, grandparents raising their grandchildren face additional expenses for food, clothing, medical care, and other necessities. To help with these increased costs, the Internal Revenue Service (IRS) has certain tax benefits, including tax credits to help these grandparents who take on the responsibility of raising their grandchildren.

One tax credit that has helped these grandparents tremendously has been the Child Tax Credit (CTC). Knowing the nation would face continued economic strain from the pandemic, the U.S. government passed and implemented an ambitious policy agenda—the American Rescue Plan—last year, which included an expanded CTC. In just six months, this historic initiative significantly reduced child poverty by providing much-needed payments to help families with the costs of raising children, including grandparents raising their grandkids.

What is a key reason for the CTC’s success? For the first time since the CTC began in the 1990s, the credit was delivered as a monthly payment (instead of a lump-sum refund when they filed their taxes). In addition, all low-income households received the full credit. Before 2021, low-income families got a partial credit, at most, with the lowest-income families (earning less than $2,500 per year) getting nothing. These monthly checks consistently helped grandparents raising their grandchildren by providing additional resources to pay for the many necessities their grandchildren needed.

Sadly, this expansion was temporary, only applying to tax year 2021. The monthly payments ended in December 2021. According to a Columbia University Center on Poverty and Social Policy analysis, when the payments ended, 3.7 million children were once again plunged back into poverty the very next month.

Advocates for the CTC are working to revive it and make the expansion permanent, with full refundability and the monthly payment option. The House passed a one-year CTC extension late last year, but 51 senators have so far refused to follow suit. When rising costs from inflation have put an even greater strain on family budgets, the fact that one senator—only one more vote is needed—can stand in the way of relief for millions of Americans is more than frustrating.

But all is not lost. We may have one last chance to get this expansion through Congress this year. How? Congress is likely to pass a tax bill after the election, extending some tax breaks to wealthy corporations. These “tax extenders” bills are typically bipartisan. This year’s tax bill could be a vehicle to help grandparents and other struggling low-income families, by resuming the expanded CTC with full refundability and monthly payments. But there are no guarantees. We, as constituents, need to put constant pressure on our members of Congress to get this done.

Right now, businesses are pushing for the continuation of a research and development (R&D) tax break that allows them to immediately deduct expenses to help with cash flow. If Congress is willing to help wealthy corporations, they should be willing to do the same for grandparents and other struggling families raising children. If we apply enough pressure, we may just get the help that grandparents, raising their grandchildren, so desperately need.

Write a letter to your elected members of Congress telling them to help grandparents who have taken on the responsibility of raising their grandchildren. The answer is staring them right in the face—expand the Child Tax Credit now.

Zelda FoxallContributor Zelda Foxall serves on the Seattle-King County Advisory Council for Aging & Disability Services. In addition, she volunteers for RESULTS, an anti-poverty organization, and AARP, where she advocates for Medicaid, economic security, housing, hunger, fraud, health care, and safety net programs that support older adults.