Recraft The EITC To Help Parents Caring For Children Who Can’t Return To School Full-Time

As parents learn how many days (if any) their children will be in a physical school this fall, many are preparing to provide care for their school-age children during at-home days. Single-parent families and two-earner married couples will face the biggest challenges of balancing paid full-time work and caregiving.  

Some parents will have to shift time from paid work to providing unpaid child care.  And while the tax system cannot open the schools, Congress could offset some of the wage loss by extending the full earned income tax credit (EITC) to people who are forced to stay home by the COVID-19 pandemic to care for children. Adult children caring for aging parents are in the same boat with adult day programs and senior programs closed.  

A recent presentation by the University of California – San Francisco Department of Medicine providing guidance on opening schools noted that if schools fail to open their physical locations this fall, women will primarily shoulder the home schooling and childcare burden.

Those families that turn to formal childcare for children under age 13 care can offset some of their out-of-pocket expenses with the existing Child and Dependent Care Tax Credit. But it’s hard to imagine that there will be enough formal child care available or that it will be conducive to the online schooling of children given that the child care providers are unlikely to be trained teachers. And parents who must stop working to care for their children are not eligible for unemployment benefits.

There are about 19 million families with at least one school-aged child living at home. About 13 million of these families are married couples. In about two-thirds of those families, both partners in the couple work in the paid labor force.

Right now, many of these families qualify for the child tax credit (CTC) of up to $2,000 per child. Some, particularly those families with low- and moderate-incomes, also receive an earned income tax credit (EITC). But both tax credits are available only to taxpayers with earnings from work. And because the credits are tied to labor earnings (up to a threshold) some people will get smaller credits if they work less.

Extending the maximum EITC to caregivers of all school-aged children (an extension of the caregiver EITC we analyzed here), could help offset income losses for low- and moderate-income families. Moreover, it would be more targeted than an extension of the CTC, which benefits many middle- and high-income families.

We don’t know how much virtual learning will occur in the coming semester, and it likely will vary from school district to school district.  But when schools closed in the spring, I learned first-hand that even among middle and high school students, it takes more than a computer screen and internet access to make remote learning happen.  It takes an engaged parent who often will have to reduce their amount of paid work. For those low- and moderate-income families who will have to play this role, an extended caregiver EITC could help keep family incomes stable.