by Angelica Leicht | May 17, 2021
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Holding out hope for a fourth stimulus payment? It's not on the table yet, but the new stimulus bill would still put more money in your pocket. Here's how.
Last week, the IRS rolled out another batch of stimulus checks to Americans who qualify for the $1,400 direct payment. This batch, which included nearly 1 million more checks, was the ninth to be sent out by the federal agency since President Joe Biden's third stimulus package was passed in March. In total, more than 165 million Americans have now received their payments, bringing the total amount of payments to about $388 billion for this round of checks.
The IRS plans to continue to roll out checks and plus-up payments in the coming weeks as more Americans file their taxes. And, while the money from the third round of stimulus checks is still helping to fill empty bank accounts from pandemic-related hardships, millions of Americans are holding out hope that a fourth stimulus check will be on the way in the near future.
That may or may not happen. Thus far, Biden has made no mention or formal proposal to Congress about a fourth stimulus payment -- which could signal where the president stands on the issue. That said, there is another stimulus package -- the American Families Plan -- on the table this year. While it makes no mention of direct payments, it does give Americans several more opportunities to put more money into their pockets. Here are nine ways this plan could help you bulk up your bank account in the near future -- but only if it makes its way past Congress.
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One of the main goals of the American Families Plan is to add more money to the coffers for postsecondary education. While this may not seem like a direct path to increasing your cash flow, it actually is -- especially if you or a child in your home will need job or skills training in the near future.
There are several education-related proposals in the American Families Plan, including one that would offer two years of free community college to all Americans, including DREAMers. To fund this, Biden is asking for $109 billion, which will be used to ensure that first-time students and workers who want to learn more skills can enroll in a community college to earn a degree or credential for free. You can use the benefit over three years and, if circumstances warrant, over a period of four years, according to the proposal.
This will be extremely beneficial to anyone who has struggled to pay the high costs of college or job training, while making a higher education much more affordable for everyone.
And, in addition to two years of community college or job training for all Americans, Biden is also calling for an approximately $85 billion investment in Pell Grants, which would help lower-income students who want to complete a four-year degree.
The plan will also make college more affordable for low- and middle-income students with investments in minority-serving colleges and universities. This includes students at historically Black colleges and universities, tribal colleges and universities, and institutions such as Hispanic-serving institutions, Asian American and Native American Pacific Islander-serving institutions, and other minority-serving institutions.
If you're a parent struggling to pay the high costs of preschool, you may also benefit financially from the American Families Plan. That's because Biden’s plan also wants to earmark $200 billion in funding to provide universal preschool to all three- and four- year-olds.
This funding would be in a national partnership with states and would offer free and inclusive preschool to all three-and four-year-olds across the nation. This alone would benefit about 5 million children, according to the fact sheet on the plan, and save the average family a whopping $13,000 when fully implemented.
Families aren't the only ones who could potentially see an increase in extra cash if the American Families Plan makes it through both branches of Congress. The average early childhood educator -- who makes about $12.24 per hour on average -- would also see an income boost.
That increase would be based on a part of the plan that earmarks money to increase early childhood educator pay. If passed, the minimum pay for an early childhood educator would be increased to $15 per hour. It would also ensure that early childhood educators who have similar qualifications to kindergarten teachers would receive comparable compensation and benefits to those working in the public school system.
This means that all employees in participating pre-K programs and Head Start would earn at least $15 per hour if the plan passes. That, along with the extended benefits for teachers with higher qualifications, would put a lot more money into the pockets of those with crucial positions working in early childhood education.
Right now, many people are struggling to hold a full-time job and care for themselves and their families. The pandemic has made it especially tough for families with younger children, many of whom struggle to afford to pay the high costs of childcare in normal years. And those issues have only been exacerbated by the economic hit the nation took from the pandemic.
The American Families Plan may help out with the high costs of childcare if it's passed. The current proposal included money that will help ensure that low- and middle-income families spend no more than 7% of their income on childcare. This would save the average family $14,800 per year on childcare expenses -- which would free up quite a bit of extra money that can go to paying for other expenses.
There are currently no formal paid family medical and leave programs available for all Americans. Workers have to rely on their employers to get time off of work to bond with a new child, care for a seriously ill loved one, deal with a loved one’s military deployment, heal from a serious illness, or deal with the death of a loved one.
If passed, this new stimulus plan would provide direct support to workers and families by creating a national comprehensive paid family and medical leave program. It would guarantee all Americans 12 weeks of paid parental, family, and personal illness or safe leave by year 10 of the program. It would also ensure workers get three days of bereavement leave per year starting from the first year the program is implemented.
Under the plan, workers would be eligible for up to $4,000 a month of paid leave for qualifying reasons, with a minimum of two-thirds of average weekly wages replaced. And, it would increase to 80% of the weekly wages for the lowest-income workers.
One of the biggest benefits of the third stimulus bill was the expansion and changes to the Child Tax Credit. These key tax cuts greatly benefited lower- and middle-income workers by making the Child Tax Credit both heftier and more accessible.
What the American Families Plan would do is to make the recent Child Tax Credit changes more permanent while extending the other expansions to the Child Tax Credit through 2025.
For a family with two children under six and two parents who earn a combined $100,000 per year, the Child Tax Credit would offer an additional $3,200 per year in tax relief. For a family with two parents and two children under six who earn a combined $24,000 per year, the expansion would add another $4,400 per year to their budgets.
The American Families Plan could also extend the expanded health insurance tax credits that were included in the American Rescue Plan. These credits help lower health insurance costs by an average of $50 per person per month.
This benefits about 9 million people while ensuring another 4 million uninsured Americans can get access to affordable health coverage. As a result, about 9 million people could end up saving hundreds of dollars per year on their insurance premiums.
If passed, the American Families Plan would triple the Earned Income Tax Credit for childless workers, which would benefit about 17 million low-wage workers.
For example, a childless worker who earns $9 per hour and works 30 hours per week is below the federal poverty line after paying taxes. By increasing the EITC to more than $1,100 for workers in this income bracket, the expansion would help to pull millions out of poverty and put a lot more money in their pockets each year.
The American Families Plan is also asking for Congress to make the Child and Dependent Care Tax Credit expansion, which was enacted in the American Rescue Plan, more permanent.
If this happens, families will receive a tax credit for up to half of what they spend on qualified childcare for children under age 13 each year. This could be worth a maximum of $4,000 for one child or $8,000 for two or more children.
This money would be available as a 50% reimbursement for families making less than $125,000 a year. Families making between $125,000 and $400,000 would be eligible to receive a partial credit. And, it's not limited to early childhood expenses, either. If passed, this credit could be used for anything from full-time care to after school care and summer care.
So while Americans may not see the likes of a fourth stimulus check, the American Families Plan, if passed, will offer plenty of money- and tax-saving opportunities to help those that remain most in need as the nation rides out the last waves of the pandemic and begins to eye recovery.
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