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Unemployment update: As states end $300 weekly benefit, a tax credit could step in for some

For some parents, advance payments for the 2021 child tax credit, in the form of monthly checks, could arrive just in time.

Unemployment update: As states end $300 weekly benefit, a tax credit could step in for some
[Image: meshmerize/iStock; Giorgio Trovato/Unsplash]
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Two dozen states are now canceling the federal $300 weekly unemployment benefit two to three months early. Deep breaths. The benefit was set to continue until September 6, according to the American Rescue Plan Act, but a movement by Republican governors to curtail the payments early has resulted in nearly half of U.S. states ending the benefit in June or July.

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Is there any hope of the benefit being extended?

Though the pandemic has accustomed us all to last-minute expansions and extensions of benefits, there’s little hope for this one: The Biden administration has reportedly explored all avenues, and found no workarounds to continue the $300 weekly extra unemployment income.

Can a tax credit replace it?

Parents may have a silver lining. Sorta. The IRS will begin sending out payments for the 2021 child tax credit on July 15, which pays up to $250 per month for children over 6, and $300 per month for kids under six. For unemployed parents losing their unemployment benefit, this new income could functionally replace it.

Why is this happening?

Politics. A JPMorgan note to clients this week noted as much, pointing out that metrics like unemployment rates, worker earnings, or worker shortages do not warrant ending the payments early. Republicans say that the $300 per week needs to be stopped because it incentivizes unemployed workers to stay home, creating a worker shortage. Economists point out that the picture is more complex, and that many unemployed people are not eligible or able to take available jobs. Humans point out that they don’t know anyone sitting on the couch instead of working.

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Isn’t this kinda evil?

Well, do you define evil as halting over $22 billion in income promised to millions of unemployed people during a crisis?

Yes

Then yes.

What if I’m a freelancer, gig worker, part-time worker, or long-term unemployed person?

If you’re one of the over two million people in these states receiving Pandemic Unemployment Assistance or Pandemic Emergency Unemployment Compensation, you will likely lose those benefits, though that is not the case in all two dozen states. Check the particulars of your state’s game plan.