Stimulus Update: How This Forgotten Group Could Be Lifted Out of Poverty Thanks to the Child Tax Credit
This group of American kids will finally be included in coronavirus-related assistance.
Forget about paycheck to paycheck; many undocumented immigrants live day to day. It's a daily struggle to provide food and other basic necessities for their families. And yet, when COVID-19 hit in early 2020 and safety programs -- like coronavirus relief checks and enhanced unemployment benefits -- were dispursed, these programs excluded undocumented immigrants.
Despite rumors to the contrary, millions of undocumented immigrants pay taxes on their income. According to the nonpartisan American Immigration Council, households led by undocumented immigrants paid $11.2 billion in state and local taxes alone in 2010. In 2015, immigrants with Individual Tax Identification Numbers (ITINs), available only to noncitizens, paid $23.6 billion in total taxes.
In an attempt to sway public opinion regarding undocumented immigrants, some try to paint them as financial leaches, bleeding the American financial system dry. Nothing could be further from the truth. After paying more than $23 billion in taxes, undocumented immigrants will never receive Social Security benefits, Medicare, or Medicaid. And when the rest of the country received financial aid during the pandemic, undocumented immigrants and their children received nothing.
What's changing
Last week, as part of the COVID-19 relief plan introduced by President Joe Biden, the majority of American families began receiving monthly payments of up to $300 per child. Deemed the "largest anti-poverty program in decades," certain undocumented immigrants and their families will be included in this round of help.
Recipients will include children who have a Social Security number, even if their parents are not U.S. citizens. Before this, even if a child was a U.S. citizen with their own Social Security number, they were blocked from receiving assistance if their parents were undocumented.
To claim the Child Tax Credit, immigrant parents must have an IRS-issued ITIN. An ITIN is a tax processing number issued by the IRS to individuals who are not eligible to obtain a Social Security number. In other words, ITINs are the IRS's way to identify taxpayers who also happen to be undocumented immigrants.
Why the change in policy matters
According to the Children's Defense Fund, more than 1 in 6 children under age six are poor, and almost half of them live in extreme poverty. Further, an estimated 6.9 million children live with a parent who is in the country without documentation. They live with a sense of chronic uncertainty and constant fear. While the Child Tax Credit may not ease their concerns of losing a parent to deportation, it should put food on the table, relieving them of that one concern.
It is estimated that the tax credit will lift more than 4 million children above the federal poverty line, offering hope in an otherwise bleak financial landscape. In total, 65 million American children are expected to benefit.
Why would an undocumented immigrant pay U.S. taxes?
An immigrant would pay taxes for the same reasons U.S. citizens pay taxes: They have a sense of responsibility toward the country in which they live, and they want to do the right thing. In addition, immigration lawyers routinely tell their clients that paying taxes is a good way to show the U.S. government that they are serious about being responsible citizens.
Important facts for undocumented immigrant parents
- For low-income families who are not normally required to file a tax return, the IRS has a non-filers portal where parents can sign up for the Child Tax Credit. At this time, the page is accessible only in English, so it's important to ask a friend or colleague for help if they need help in Spanish.
- Monthly payments are only scheduled to run through December, meaning only half of the total Child Tax Credit due will be paid by the end of the year. Parents -- even those who are generally not required to file income taxes -- can claim the other half of the credit by filing 2021 taxes next year.
- Signing up for the Child Tax Credit on behalf of their child will not impact their current immigration status or ability to qualify for a green card or U.S. citizenship in the future.
This has been a tough 18 months for people around the globe. Ideally, life will begin to get back to normal for the millions of children and families who will benefit from this tax credit.
Alert: highest cash back card we've seen now has 0% intro APR until 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
Dana is a full-time personal finance writer, with more than two decades of experience. Her focus is on helping readers feel less alone as they navigate their personal finances and offering actionable insights.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Motley Fool has a disclosure policy.
Related Articles
View All Articles
If You Have a Wells Fargo Savings Account, You Should Switch ASAP. Here's Why
![Steven Porrello]()
By: Steven Porrello | Updated - First published on Nov. 7, 2023
These days, storing your savings in a Wells Fargo account pretty much serves one purpose: Quick access to cash at brick-and-mortar banks or ATMs. But if you have savings you're not spending anytime soon, a Wells Fargo Way2Save Savings account ranks high in the worst places to keep your savings. No offense if Wells Fargo is your favorite bank, but it's time to stop leaving money on the table. Here's why. Wells Fargo can't compare to today's top high-yield savings accounts As of writing this, the Wells Fargo Way2Save Savings account has a 0.15% APY, which is not only lower than the national average (0.60%) but also several times lower than today's top-paying savings accounts. At 0.15%, you'll earn about $15 annually for every $10,000 you save. Not exactly the most exciting reward for saving money. By comparison, many of today's top-paying savings accounts have rates above 5%. Case in point: the Western Alliance Bank High-Yield Savings Account via Raisin. This account has a mouth-watering APY of 5.26%, no fees, and a low opening deposit of $1. At that APY, you'll earn $526 for every $10,000 you save. That's 35 times more than the $15 you would have earned in your Wells Fargo Way2Save Savings account. Of course, the major benefit of the Wells Fargo Way2Save Savings account is that you can access your savings at Wells Fargo branches or via ATMs. That's important if you withdraw cash frequently, as online banks will make you transfer the money electronically to an account with ATM access. But even if accessing cash is important to you, there are still better options than the Wells Fargo Way2Save Savings. For example, the SoFi Checking and Savings account gives you a cash back debit card and access to over 55,000-plus fee-free ATMs. Plus, it has a decent APY of up to 4.60%. That's not the highest APY I've seen, but it's not bad for an account that combines checking and savings into one. What about the Wells Fargo Platinum Savings account?Now, the Wells Fargo Platinum Savings account does have a compelling offer right now. New savings customers can lock into a promotional APY of 4.62% when they sign up for a new Wells Fargo Platinum Savings account before Jan. 9, 2024, and maintain a daily minimum balance of $10,000. The emphasis there is on "new." According to the fine print, this offer is for new savings customers who don't currently have a Wells Fargo savings account -- whether that's Wells Fargo Platinum Savings or the Wells Fargo Way2Save Savings. So if you're already a Wells Fargo client, the bank will likely assign you the account's regular APY, which ranges from 0.25% to 2.51%, depending on balance.Again, if you're saving money at Wells Fargo, there's no question about it -- you're missing out on higher interest rates. You may have good reasons for using Wells Fargo, such as having greater access to your savings. But if you're fine with online banking, then trust me -- you deserve better than a rock-bottom APY. Take a look at today's top-paying savings accounts and see how much more you could be earning for your savings.
Have a Chase Savings Account? You're Probably Missing Out on $400-Plus per Year
![Steven Porrello]()
By: Steven Porrello | Updated - First published on Nov. 24, 2023
Chase is the largest bank in the U.S., and one of the largest in the world. It has over 4,700 brick-and-mortar locations, more than 15,000 ATMs, and around a couple trillion in bank deposits. But for all this banking power, there's one thing Chase doesn't have: a savings account that can compete in today's high-rate environment. Seems as if a big bank like Chase would have at least one savings account that earned high interest, right? Truth is, banks lose money when they pay high interest rates and will forgo offering them if they don't need to attract customers. As the largest bank in the U.S., Chase is doing just fine and doesn't need high rates to bring in more deposits. But that leaves Chase clients in a bit of a conundrum. Just how much money are you missing out by keeping it in a savings account at Chase? Well, when you start to crunch the numbers, it can be a lot. The average American is probably missing out on $400 per year Today's most competitive rates on savings accounts are sitting at a two-decade high of about 5.25%. Most of these savings accounts are through the company Raisin, which is essentially a marketplace for finding high-yield savings and CDs. Last I checked, the highest rate on Raisin was 5.30% on a Customers Bank High-Yield Savings Account, followed by both VyStar Credit Union and DR Bank at 5.29%. How much could you make on 5.30%? According to a recent survey of U.S. Family Finances by the Federal Reserve, the median savings in 2022 was about $8,000. If you saved $8,000 in the Customers Bank High-Yield Savings Account powered by Raisin, you would earn about $424 within a year. In contrast, a Chase Savings Account pays out at a rock-bottom APY of 0.01%. At that rate, it's almost pointless to do the math but if you like your copper Abes, you'd make about $0.80 on $8,000 in 12 months.When is a Chase savings account worth it? I'm not going to lie -- I have a Chase account. I don't keep a lot of money in it, but I do keep some. The reason is that I live four blocks from the Chase bank in downtown Portland and like the security of having some money within reach. When I need to withdraw cash (rare but it happens), I can just go in person and use the ATM. And when I need to deposit cash -- birthday money, thanks Mom -- I can do it without jumping through hoops. If you want banking convenience like this, a high-yield savings account through Raisin or any other online bank will likely frustrate you. Raisin is a case in point: When you deposit money in a Raisin-powered account, you transfer it from an external account (which could be a savings account at Chase) into a service bank (Lewis & Clark Bank), which is then transferred into a custodial account at the bank account of your choice (a Customers Bank High-Yield Savings Account or a Western Alliance Bank High-Yield Savings Account, for example). If you want to withdraw this money, you have to transfer it back to your external account, which could take a few business days. For those who need cash fast, each nail-biting day might make that high yield not worth the stress. So you might have to diversify. Truthfully, it's best to keep a little money within easy access for emergencies, but not so much that you miss out on today's high rates. If you've engorged your Chase Savings Account, take a look at some other top-paying savings accounts to see how much you could earn in interest. If your savings is anywhere near the median -- $8,000 -- you could potentially pick up at least $400 on your savings.
Are CDs a Good Investment for 2024?
![Steven Porrello]()
By: Steven Porrello | Updated - First published on Nov. 28, 2023
Certificates of deposit (CDs) offer high guaranteed returns in exchange for locking your money up at a bank or credit union for a term that you choose. While lackluster in previous years, CD rates have taken off in 2023, aided in large part by the Federal Reserve's continued interest rate hikes. These days, it's not rare to find a short-term CD paying out at a rate above 5%, with some paying out as high as 5.70%.With only a few weeks left in 2023, many of these CDs look like good investments going into the new year. But are they? If you're thinking about investing in one soon, let's take a look at what we know.Short-term CDs could make great investments, but don't ignore longer termsRight now, you can find the highest rates on short-term CDs, like those ranging from three to 18 months. For example, on Raisin's CD marketplace, all the CDs paying above 5% are within that short-term range.This isn't a coincidence. Rather, it reflects the expectation that interest rates will fall sometime in the future. Banks want to keep their CD rates competitive, but if they're paying 5.70% for five years, they could end up losing money.If your goal is to earn interest at a high rate, a short-term CD could be a good investment, especially if you're hesitant to lock into a longer term. Now might even be the best time to build out a CD ladder, combining short and long terms to stretch out today's high rates for longer periods.That said, I wouldn't ignore long-term CDs on the grounds that their rates are lower today. It's possible the Fed could start reversing course in 2024, hiking down rates to a more sustainable level. If that holds true, today's short term CDs could very well mature at a time when CD rates are much lower. You might lock into a 5.70% CD for six months, but a 4-year CD at 4.50% could freeze an elevated rate for a few years longer.A no-penalty CD could make a good investmentA major problem with CDs is that they come with early withdrawal penalties. These penalties are often equal to a few months worth of interest, though some could be as high as six to 12 months. If you withdraw from your CD before your term is up, you'll pay this penalty, which could sometimes result in you losing money.One way around this is to get a no-penalty CD. These CDs typically have a very brief no-withdrawal period, usually seven days or less, after which you can liquidate your CD account with no penalty. Traditionally, no-penalty CDs have low interest rates compared with regular CDs with the same term. But in today's high rate environment, you could easily pick up a no-penalty CD with an APY above 5%.For example, Raisin has several no-penalty CDs on its marketplace. As of writing this, the highest paying no-penalty CD comes from Greenwood Credit Union with a 5.37% APY and 12-month term. Other close contenders include Technology Credit Union (5.36%, five-month term) and Mission Valley Bank (5.35%, three-month term).What's great about these CDs is that you could break your contract to capture a different APY or longer term at a later date. Let's say, for instance, that the Fed indicates it's going to start lowering interest rates in 2024. You decide you're going to lock into a 4% rate on a 3-year CD. If you have your money tied up in a no-penalty CD, you could easily navigate out of the contract and open a new CD account. Likewise, if you have emergency savings, a no-penalty CD could help you earn at a higher interest rate, though I would recommend you consider a high-yield savings account first.Will CD rates stay elevated in 2024?CD rates are at a two-decade high, but they won't stay this high for much longer. Once the Fed feels confident inflation is under control, it won't be long before rates start to fall. I'd say if you're in the market for a CD, now is a great time to lock into one of today's top paying CDs. Take a look at different terms and see how much interest you could earn in 2024.
Does Your Income Make You Upper Class, Middle Class, or Lower Class?
![Christy Bieber]()
By: Christy Bieber | Updated - First published on Sept. 5, 2023
Incomes vary widely across the United States, with some people making many times the amount that others earn. If you've ever wondered how your personal finances stack up, and what "class" your income officially puts you in, here's what you need to know.What income do you need to be upper, middle, or lower class?Based on 2021 data, here's what you would need to earn in order to be in each class:Lower class: This is defined as the bottom 20% of earners. Those in the lower class have an income at or below $28,007.Lower middle class: This is defined as individuals in the 20th to 40th percentile of household income. Earnings among this group are between $28,008 and $55,000Middle class: The middle class is officially those whose earnings put them in the 40th to 60th percentile of household income. The income range is $55,001 to $89,744.Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131.Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.Take a look at these numbers and see where you fall based on your own earnings. And remember, this is a snapshot in time -- your earnings can change throughout your life, and so can your class designation.Will your success be determined by your income and class?It's probably not a surprise that those in the upper classes or in the upper middle class do have a higher net worth than those in the lower class or the lower middle class. But the disparity is greater than you might think. While the median net worth of those with incomes of $149,132 or higher is $805,400, the median net worth of those in the lower class is just $12,000.Your income impacts how easy it is for you to build wealth. If you make more money, it is easier to save it and invest it in a brokerage account where it can work for you. If you make less money, then you may struggle even to cover the necessities out of your checking account, much less to buy valuable assets that help you grow richer over time.But that doesn't mean people who don't make a lot of money can't be a financial success. A lot depends on what you do with the money you actually have, including how much you spend and how much you save.There are plenty of people who make over $100,000 a year who live paycheck to paycheck, and plenty of people with incomes that put them squarely in the lower or lower middle class who have diligently saved and grown quite wealthy over many years.Here's how you can improve your standingDon't be discouraged if you aren't in the class you hope to be. For one thing, you have opportunities to increase your income by taking the following steps:Learning new job skills: You could obtain a certification, take part in a management training program at work, or take some classes to develop skills that may help you get promoted (such as computer training courses or public speaking classes), depending on your industry.Take on a side hustle: The average side hustle brings in $483 per month, which is a good amount of extra money that could make a meaningful difference in your income.Work some extra hours: If your company allows you to work overtime, take advantage of it, as many people are paid time and a half for overtime hours.Negotiate your salary: According to Pew Research, when workers negotiated for higher pay, 28% said they received the extra money they asked for and 38% indicated they were given more than originally offered but less than their ask. Whether you are getting a new job or staying at your current job but feel you're underpaid, it doesn't hurt to make a request for more money -- especially if you can find salary data to back up the fact that others in your industry are paid more.And even if your earnings never put you in the top 20% of earners, you can still have a rich life and end up with the financial security you deserve -- especially if you prioritize saving as much as you can for as long as you can.
The 7 Best Men's Gifts to Buy at Costco
![Dana George]()
By: Dana George | Updated - First published on Nov. 25, 2023
'Tis the time of year for gift-giving, which can be easier said than done. After all, what do you give the man who has everything? Whether you're shopping for your father, partner, child, or friend, you want to get it "just right." We combed through Costco's latest deals to find gifts we believe any man would appreciate.One important thing to remember: One or all of these selections may be unavailable at your local Costco warehouse, so if anything strikes your fancy, consider ordering it on Costco.com.1. Bulova Marine Star Chronograph Stainless Steel Men's Quartz Watch: $240Why it's a great deal: The Marine Star watch is currently on sale for $442 through Bulova.com, $202 more than the Costco price.With a distinctive face and stainless steel band, this watch features Japanese quartz movement and a water resistance depth of up to 328 feet (100 meters).2. Avalanche Men's Quarter-Zip Top: $15 (with $4 manufacturer's savings, valid through Dec. 25, 2023)Why it's a great deal: Avalanche Outdoor Supply currently has its quarter-zip top marked down from $40 to $24, meaning the sale price is still $9 higher than Costco's price.Costco may not be the first place you think of when clothes shopping, but take our word for it – this is a great-looking piece of clothing. With a contrasting zipper, hem, and cuffs and an embroidered logo on the sleeve, it manages to be simple and distinctive all at the same time.3. Dunhill Gold Yellow Sunglasses: $160Why it's a great deal: We looked, and the next lowest price we could find for these sunglasses was $280 through EyeSpecs.com. If you want to buy something nice but are carefully protecting your checking account balance, these sunnies are a good option.If you know a man who would look amazing rocking a pair of aviator sunglasses, now's your chance to snag a bargain on a high-end pair with titanium frames and 100% UV protection.4. Conair All-in-One Metal Groomer with Interchangeable Magnetic Attachments: $30Why it's a great deal: Amazon's price on the all-in-one groomer is currently $75, a full $45 more than Costo's price.This is not your father's standard morning tool. The Conair groomer gives the user 18 possible hair and beard trimmer lengths, is 100% waterproof, and comes with patented quick-change magnetic heads. Plus, the lithium ion battery holds a charge for up to four hours.5. LG 70" - UR8000 Series – 4K UHD LED LCD TV: $500Why it's a great deal: We compared apples to apples and found the same television at ShopEzUSA.com. The major difference was the price. At $630, it would set you back an extra $130.If there's a man in your life who swears he can tell how many pixels a model has just by looking, this Smart TV is likely to have everything he's looking for. With bells and whistles galore and a three-year warranty, you can spoil him without having to borrow against your home equity.6. Chefman Home Slice™ Electric Indoor Pizza Oven: $300Why it's a great deal: Buying the same Chefman pizza oven at Walmart would cost you a full $200 more.How amazing would it be to come home to the aroma of artisanal pizza baking in the kitchen? With heating capability up to 800°F and a double-pane glass window, the Chefman Home Slice™ creates 12-inch pizzas with a perfect crust and melted cheese. Plus, with six presets, the user only needs to let the oven know which type of pizza they're making.7. Inspire Fitness 45/90 Hyperextension Bench: $390 (deal ends on Dec. 24, 2023)Why it's a great deal: The price on the same hyperextension bench at Walmart is $549, meaning you'll save $159 using your Costco membership to make the purchase.For the man who's dedicated to sculpting his body, this heavy-duty hyperextension bench offers five positions ranging from 45 to 90 degrees. It specifically targets abs, obliques, upper and lower back, and glutes. It also comes with a three-month Centr digital membership to get his workout off on the right foot.If you're hunting for the right gifts but want to find ways to save money, Costco is making it just a little easier this year.