Times they are a Changing
The 2020 USA Census reveals some really big changes in our country. Demographers now project that more Americans will be over age 65 than under age 18 by 2034. Yikes! That’s only thirteen years from now. The Baby Boomer Generation, that began turning 65 in 2011, and the last of this generation celebrates that birthday in 2030. The impact of Boomers turning 65 at a rate of 10,000 a day right now is hard enough to grasp. Equally startling is the thought with each year, we have fewer children in our communities.
The Cost of Living
The USA has a long, proud history of supporting the creating and expansion of the American Family. No politician, who wants to be re-elected, would ever vote against the child tax credit. The Department of Agriculture calculates the cost of a two-parent, two-child family will spend an average of 12,980 dollars in 2020 excluding the cost of college. In today’s dollars, that means the first eighteen years of life cost approximately 234 thousand dollars per child. (I hope you were sitting down when you read that number).
Let’s look at the other end of the life span. According to AARP research, a retiree previously making fifty-thousand per year will need eighty percent of that in retirement. With Social Security at two thousand dollars per month, that means you will need to have saved sixteen thousand dollars for each year of life in retirement. For each decade in retirement, you will need one-hundred sixty thousand dollars squirreled away. Eighteen years of retirement is approximately 288 thousand dollars of savings.
Parents and Caregivers Both Deserve a Tax Credit
The numbers are staggering. Caregivers provide about four hundred and seventy-seven billion dollars annually in unpaid care to their loved ones. Care is provided for people of all ages whether it is a terminally ill child, a parent, or other vulnerable family members. Today’s caregivers take on the physical, emotional, and financial challenges which greatly increased during the pandemic. Caregiving can be costly both in terms of out-of-pocket expenses paid to assist their loved ones and potential income and retirement savings foregone. The support provided by family caregivers also helps save USA taxpayer dollars by assisting in delaying or preventing expensive nursing home care and unnecessary hospital stays. On average, AARP reports caregivers to spend seven thousand dollars from the family budget.
The Credit for Caring Act of 2021
A bill to amend the Internal Revenue Code of 1986 to provide a nonrefundable credit for working family caregivers was introduced by Senators Ernst, Warren, Bennet, and Capito last week. Representative Linda Sanchez is the sponsor of the House version of the same bill in this 117 Congress. The Credit for Caring Act would provide much-needed financial relief.
The Credit for Caring Act would create up to five thousand dollars of non-refundable tax credit adjusted for inflation for family caregivers. The amount of the credit would be 30 percent of the qualified expenses paid or incurred by the family caregiver above two thousand dollars, up to a maximum credit amount of five thousand. It would help offset the out-of-pocket costs, such as home safety modifications, respite care, home care, transportation, smart technologies, and more. This bill would help eligible working family caregivers caring for loved ones of all ages, regardless of whether they live with their loved one or if their loved one is a dependent.
Looking to Future Generations is No longer the Answer
Passing this tax code change is urgent as the size and composition of the American family continue to change. This issue. impacts every generation as children are caring for parents in record numbers. In fact, one-quarter of all caregivers are Millennials. How can we justify the burden we are heaping on our youngest generations?
We are at the tip of the iceberg here. With each passing decade, we have more family caregivers who have spent their own nest egg on caring for the last resulting in an even more impoverished generation that now relies on younger families to support their retirement. This is unsustainable.
Contact Your Legislators, Caregivers Deserve Tax Relief
I encourage you to reach out to your Congressional representative and demand they support this important legislation. The Credit for Caring Act has been introduced every year since 2016. Both the House and Senate, Democrats and Republicans have supported this Act in previous years. It’s time to get this important change to our tax code over the finish line.