Understanding Provisions Affecting Women, Mothers, and Working Families in the New Tax Agreement
December 10, 2010As new tax legislation makes its way through Congress, the media storm surrounded it can be overwhelming. Here are some key issues to understand about how the proposed agreement will affect women, mothers, and working families.
- The agreement as it currently stands would extend the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), and Unemployment Insurance. These are three out of seven policies in the Recovery Act that have kept 3.3 million girls and women above the poverty line. It also includes the American Opportunity Tax Credit (AOTC).
- The Earned Income Tax Credit supplements the wages of low income workers. Working mothers are particularly assisted by this policy. The range of workers eligible for the EITC was expanded under the Recovery Act, and now gives larger families up to $1,040 more per year than it did before. The EITC lifts more children out of poverty than any other single program.
- The Child Tax Credit reduces families’ federal income tax by $1,000 per qualifying child. It, too, was expanded under the Recovery Act, so that a single mother with two children making $17,000 dollars per year will receive $2,000 dollars instead of the $640 she would have been eligible for under the previous plan.
- The agreement also calls for an extension of unemployment insurance for an additional 13 months. About 42% of unemployment recipients have or live with children, who benefit from the extension of this program.
- The American Opportunity Tax Credit is a $2,500 per year partially refundable credit given to working families and students to help cover college tuition costs. The agreement calls for a two-year extension of the AOTC, which would cover more than 8 million students.
- On the whole, one of every three families benefiting from these extensions is headed by a single mother. The provisions will benefit an estimated 12 million women in lower-income households, which are the most likely to spend the additional money from the credit, thereby stimulating the overall economy and promoting job growth.