How Three Families Use Child Tax Credit Payments – Forbes Advisor


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For many American families, monthly child tax credit payments offer more than just a sum of money – they provide financial stability and peace of mind.

President Joe Biden expanded the child tax credit with the US bailout in March. It has been improved in several ways:

  • He increased the credit to $ 1,600 per child.
  • The 17-year-olds qualified for the credit for the first time.
  • Eligible parents and guardians could choose to receive half of the credit as monthly advance payments rather than just a credit or refund at tax time.

Now, as lawmakers negotiate the Build Back Better plan, a $ 1.75 trillion investment in America’s social safety net, the fate of the expanded child tax credit is in their hands. But for some families, continuing to receive those monthly payments will make the difference between owning a home sooner or being able to put food on the table.

These payments, which can reach up to $ 300 per month per eligible child, are described as “one of the most effective anti-poverty programs ever.” They reduced child hunger rates in 3.3 million households and lifted 3.5 million children out of poverty in the first two months of their implementation.

Here’s how three families are using their monthly child tax credit payments and what continuing to receive them in the future would mean for their families.

A faster path to homeownership

Tamara Sykes, 30, and her husband spend almost $ 1,000 each month on childcare for their three-year-old daughter. They are part of one in four families who use their monthly CTC payments to help cover childcare costs.

Sykes and her husband, who live in Columbus, Ohio, are both employed and collectively earn around $ 120,000 a year. Before they started receiving the monthly payments, it sometimes seemed difficult for them to pay for child care, like when Sykes was fired from her job and when she realized how much money they would need to save. for a down payment on a house.

Today, they are stepping up their savings to be able to buy a house and move out of their apartment, which they believe is crucial for their family’s growth and health.

“Having a home is not easy, but for us, it is also a way of ensuring a future for [our daughter]Sykes said.

The monthly payments help Sykes see clear progress toward their down payment goal while contributing to their daughter’s education fund each month. The impact is immediate, rather than waiting to receive the funds as a lump sum when they file their tax returns.

Senator Joe Manchin (D-WV), a centrist Democrat, is one of the toughest negotiators on the reconciliation bill. He launched the idea of ​​creating a family income limit of $ 60,000 for recipients of the child tax credit. If enforced, this limit would disqualify Sykes and her husband.

Whether or not they remain eligible, Sykes supports the maintenance of monthly payments, especially for parents who are struggling to meet their basic needs.

“Those who really need the money, it really has a bigger impact on them on a monthly basis,” says Sykes. “It can really relieve a lot of stress from a parent.”

Support for behavioral therapy and tutoring costs

Jessica Thompson’s sons are past childcare age – they’re 15 and 17 – but monthly child tax credit payments are funding their personal development. Her eldest son has autism and is in weekly behavior therapy sessions. Her youngest has a weekly tutor for the school.

Thompson, 43, is a behavioral technician, but was unable to work during the peak of the pandemic. Her clients, who are preschoolers, require in-person sessions, so going online was not an option.

Although Thompson’s family has health insurance through her husband’s employer, monthly child tax credit payments have become an important cushion during the pandemic.

“Payments helped pay [the tutoring and therapy] without worrying about not being able to pay for something else, ”says Thompson.

Thompson is now back to work part time. Her family is not very dependent on monthly payments, but not receiving them would dramatically change their financial situation each month. If new income limits are added and her family no longer qualifies, Thompson says it will “definitely hurt them.”

“We fought for many, many years when my son was younger because I quit my job to stay home with him,” says Thompson. “We’re just now in a space where we can pay our bills and still have some leftover.”

Helping a grandmother raise her grandson

Lisa Strickland, a 48-year-old grandmother, living in Kansas City, Missouri, worked part-time in home health care but resigned from her post in April after long hours and high risk of exposure to Covid -19. She is currently unemployed and lives on disability benefits, SNAP benefits and rent assistance from the Ministry of Housing and Urban Development.

Strickland has full custody of his 11-year-old granddaughter and regularly looks after his two other grandsons.

Strickland only has $ 1,600 to live on each month, including the $ 250 monthly child tax credit she receives for her granddaughter. But after paying the rent, utilities, her cell phone, groceries, fueling her car to get to job interviews, paying for doctor’s appointments and medical bills, and supporting to meet the needs of her grandchildren, money flies.

Strickland says she’s trying to save most of the child tax credit payment for things specifically for her granddaughter, like money for a school trip or new clothes. “I know it’s not much, but I’m doing my best with it,” she said.

When asked what she would say to lawmakers when they decide to extend monthly child tax credit payments and for how long, Strickland didn’t think twice before responding.

“I would ask them to please continue them as they are a great help to myself, my family and my children,” says Strickland. “I know there are families here who need this $ 250, and while some of them may not be using it well, a lot of us are.”

She also supports adding a requirement that recipients must work to be eligible for the credit, saying people should continue to be motivated to provide on their own. As she says, people need to “work for it” just like she tries to find a job despite her disability.

“People can’t just rely on government,” says Strickland. “It’s not good.”

Will Monthly Child Tax Credit Payments Become Permanent?

President Joe Biden’s original plan was to make the expansion of the child tax credit permanent. But that goal is under threat as lawmakers continue to negotiate on the Build Back Better plan, which has already seen vital programs including paid family leave and free community college cut.

After Democrats struggled to convince everyone, Biden stepped in and compromised to lower the overall price. Many programs that were supposed to be permanent could now be simply extended temporarily, including the child tax credit, which can only be extended again for one year.

And while it may sound disappointing, some lawmakers are betting on the program’s instant popularity to argue for continued expansion well beyond the year indicated in the new legislation.

But the Washington feuds will affect the wallets of ordinary Americans. For many, the expanded child tax credit makes the difference between being financially stable and struggling to survive.

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