Monday July 4, 2022
Child Tax Credit Helps Families
The Federal Reserve recently published the results from a survey with the title, "Economic Well-Being of U.S. Households in 2021."
The survey suggests that the increased child tax credit last year was helpful for many families. The credit was expanded from $2,000 in 2020 to $3,000 in 2021 for children under age 18 and $3,600 for children under age 6. It was phased out for single individuals with incomes over $75,000 and joint filers with more than $150,000 in income.
This Federal Reserve survey is a good picture of the financial status of families in America.
1. Financial Well-Being — Seventy-eight percent of adults were living an acceptable or comfortable life. This is the highest level reported since 2013. Three fourths of parents stated they were doing at least "okay" in 2021, this was eight points higher than the prior year.
2. Family Income — The survey asked parents for their primary budget expense. Housing was the top reported expense at 30%, 20% spent the largest amount on a child or children and 15% reported their largest budget expenditure was for food. About 15% who had incomes of less than $50,000 were struggling to pay bills. This number who are struggling was 27% for low-income parents who responded to the survey.
3. Employment — Many individuals changed jobs in 2021. The survey reported 15% of workers were in a new job and 60% of those who changed jobs felt they now had a better employment situation. The responses indicated 77% of employees thought their employers were taking appropriate precautions for COVID-19. For the 7% of adults who reported they were not working, COVID-19 was a substantial factor in that decision.
4. Unexpected Expenses — About 60% of adults indicated they have the cash available to cover a $400 emergency. This is an increase from 50% who were able to cover a $400 emergency when the survey started in 2013. Twenty percent of adults reported they had an unexpected medical expense between $1,000 and $2,000 during the past year.
5. Housing — There was a substantial increase in refinancing in 2021 — about one fourth of homeowners refinanced. Those who were renting included 17% who were behind on rent at some point in 2021 and 8% who reported they were behind on rent at the end of 2021. The total outstanding back rent was approximately $10 billion.
6. Education — Most parents of children enrolled in K-12 classes reported that their children were now attending completely in person. Only 7% of parents stated their K-12 child was attending through a remote or hybrid plan. The survey indicated 56% of parents believed that their children's academic performance was better in 2021 than prior years. Higher-education students indicated they prefer online or hybrid education until the pandemic is declared over.
7. Retirement Investments — Forty percent of employed individuals thought their retirement saving plan was on track. This is up slightly from 36% in 2020. About 25% of adults who retired during the past year indicated COVID-19 was a substantial factor in that decision.
Published May 27, 2022
IRS Highlights Improved Taxpayer Service
Protect Yourself From Fires and Hurricanes This Summer
Tax Benefits Highlighted for Businesses
How Do You File Your Tax Return?
IRS Advice for Late Filers, Extenders and Nonprofits