Child Tax Credit Benefit Lapses, Leaving 30 Million Households To Rethink Budgets
More than 30 million households received up to $300 per child in July, The Wall Street Journal reported, cutting childhood poverty in the U.S. and leaving many to look forward to a possible extension into 2022. As the extension lapsed, many American families are now worried about what their household budget will look like without the monthly child tax credit payment.
The expanded tax credit boosted the 2021 annual value from $2,000 to $3,000 per child for most households — with a $600 bonus also being in place for children under 6. Families received half of this tax credit in monthly payments and will receive the other half when they claim the credit on their 2021 tax returns. Researchers found that many families used these advance monthly payments to pay for necessities, WSJ noted.
According to a report produced by a team of researchers from Washington University of St. Louis and Appalachian State, almost 30% of families spent their monthly child tax credit payments on food for their family (51%), bill payments (36%) and clothing and other essentials for their children (30%). The rate of food insecurity also dropped by 30% after the first payment went out. Many families also used monthly payments to pay down debt or to build savings.
WSJ pointed out that families with children who reported not having enough to eat sometimes or often dropped from 11% to 8.4% after the expanded credit went out, according to Census Bureau data. WSJ also noted that a JPMorgan Chase Institute analysis of banking data found that the median bank account balance for families receiving the credit was 65% higher at the end of September than two years prior.
“Extending the expanded credit and making the child tax credit fully available on a permanent basis to families with low incomes would improve children’s lives in the near and long term and benefit society overall,” the Center on Budget and Policy Priorities stated.
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