No Child Tax Credit in January? Here’s How to Prepare for the Worst

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President Joe Biden’s Build Back Better Act has been stuck in Congress and now may not pass until 2022. If the economy-focused bill doesn’t pass before the new year, there will be no advance child tax credit payment for families in January. In fact, Congress would need to approve an extension of the CTC — with or without the full BBB bill passing — by Dec. 28 to ensure payments continue in January 2022. Otherwise, the IRS would not be able to ensure timely processing of Jan. 15 payments.

See: Child Tax Credit Payments Could Stop in 2022 — Replace Your Lost Income With These Budgeting Tips
Find: Didn’t Get Your Child Tax Credit? Here’s How to Track It Down

Sen. Joe Manchin (D-W.Va) is cited by The Hill as opposing the spending bill in its current iteration, pointing to inflation concerns and overall cost, and negotiations have been a sticking point for several months. The Dec. 28 deadline, Sen. Tim Kaine (D-Va.) told The Hill, is “the single best deadline that might get us to finally act.”

Make Your Money Work for You

The Center on Budget and Policy Priorities estimates that 9.9 million children could once again drop below the poverty line, or fall deeper into poverty, if the CTC is not extended. These numbers include 3.8 million Latino, 2.9 million white, 2.1 million Black, 426,000 Asian and 280,000 American Indian or Alaska Native children, according to the CBPP.

Additionally, 27 million children would only get a partial credit — or no credit at all — because their families’ income is too low to claim a non-refundable tax credit. Non-refundable tax credits can only be credited up to the amount of taxes you owe, while fully refundable tax credits can become part of a tax refund.

The CBPP says that 59% of households with incomes below $35,000 spent the expanded, advance CTC on food, while another 52% spent it on utilities. Per the CBPP, a whopping 91% of families with incomes below $35,000 spent the money on any or all of the following: food, utilities, rent, mortgage, clothing and education.

How to Prepare for the Loss of CTC

With the prospect of these funds vanishing in January, what can families who have been relying on the funds do to make ends meet?

Make Your Money Work for You

For some, returning to work or increasing their working hours could be a solution. If you’ve paid down debt using CTC funds, perhaps you’re in a situation to take out a personal loan or open a credit card with a 0% introductory APR until your financial situation improves.

Learn: 50 Tips for Saving Money During the Holidays
Explore: How Retirees Are Saving Money by ‘Aging in Place’

For families hit the hardest, it may be wise to look into social programs within your community at this time. Food pantries tend to be well-stocked during the holidays, and then donations taper off in the new year. If you qualify for these programs, now is the time to stock up on staple items.

If you’ve been able to catch up on utility bills via the CTC, cutting household expenses may be necessary in order to continue making on-time payments. If you are still behind, call your utility providers and ask for a payment agreement that will fit your new budget. You might also explain your situation to your landlord and ask for a temporary rent reduction.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

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