Child Tax Credit: Parents Struggle and Poverty Set to Rise as Enhanced Benefits End

“It’s a huge expense,” said Lansdowne, 26, who worked as a social worker for the state of Maryland until the fall and had hoped she would continue to receive the $300 monthly infusion this year. “When you don’t have the funds to cover these things, you have to get creative.”

Lansdowne, who also cut the cable to his Martinsburg, West Virginia home to help pay his mortgage, is looking for a job. But it’s not easy as she would have to shell out hundreds of dollars a month for childcare for Kaleasi and her four-month-old baby sister, Lalani.

“Go talk to the working class and see how they feel,” she said. “I’ll tell you, it helped me a lot. And now I’m in a difficult situation where I can’t work because there’s no child tax credit to help me with the child care.”

Senate negotiations stalled

Manchin effectively put negotiations over the Build Back Better package on ice last month when he said he could not support the provisions, particularly the improved child tax credit.

The Senate said it plans to review the package and possibly modify or split the proposals into proposals that Manchin and other moderate Democrats would endorse.

However, President Joe Biden recently acknowledged that the boosted credit could end up on the cutting room floor.

Democratic proponents of enhanced credit are not giving up so easily. Five senators — Michael Bennet of Colorado, Sherrod Brown of Ohio, Cory Booker of New Jersey, Raphael Warnock of Georgia and Ron Wyden of Oregon — wrote a letter to Biden and Vice President Kamala Harris last week. urging to “secure” an extension of credit.

“The expanded CTC is a flagship domestic policy achievement of this administration and has been a resounding success,” the senators wrote. “The consequences of not extending the CLC expansion are dire, especially as families face another wave of the Covid-19 pandemic.”

“After historic progress, it is unacceptable to return to a status quo in which children are America’s poorest residents and child poverty costs our nation more than $1 trillion a year,” they said. they wrote.

The Democrats’ $1.9 trillion coronavirus relief package, which Biden signed into law in March, made three significant changes to the child tax credit for 2021. It increased the maximum credit to $3,600 for children under 6 and $3,000 for 6 to 17 year olds. Heads of households earning up to $112,500 a year and married couples earning up to $150,000 were eligible for the full amount.

In addition, he made the credit fully refundable so that low-income families could qualify for it. And it sent half the credit to families in monthly installments of up to $300 from July through December to help cover expenses.

More than 36 million families with more than 61 million children received monthly payments, which totaled more than $93 billion, according to the Internal Revenue Service.

Prior to the expansion, eligible parents received a credit of up to $2,000 for children up to age 17 when they filed their taxes. This is what is in effect for 2022 since the bonus has expired.

Fighting child poverty

The improvement has helped reduce child poverty — an achievement that Biden and congressional Democrats have repeatedly touted.

Some 3.7 million children were lifted out of poverty in December, including 737,000 black children, 1.4 million Latino children and 1.4 million white children, according to Center on Poverty & Social Policy estimates. from Columbia University. The credit has led to an estimated decline of almost 30% in child poverty.

Without payments in January, the monthly child poverty rate could rise from 12.1% in December to 17.1%, the highest share since December 2020, according to the center.

The expiry of the subsidized credit comes at a particularly difficult time for families. Inflation is driving up prices – especially the cost of food – and the rapid spread of the Omicron variant of the coronavirus has forced many people to miss work because they or their loved ones are sick. .

“This is a time when those benefits would be even greater than they were six months ago, in many ways, and they’re not there anymore,” said Zachary Parolin, principal investigator at the center.

“This stability and predictability of income support is extremely important for families to plan their weekly and monthly expenses, to have the peace of mind that they will – at least more than before – be able to pay their basic necessities and provide for their families,” he said.

Detroit’s Victoria Washington is feeling more pain at the supermarket these days, noting she pays 1.5 to twice as much for groceries. The price of ground beef is on the rise and she is struggling to find items on sale.

Rising costs, combined with the end of the $300 monthly credit for her 5-year-old daughter, Addison, have forced her to put off some essential repairs to the home, including repairing the roof and strengthening the foundation. Addison could really use a new winter coat but is content with her current one for another season.

When she received the credit, Washington was able to enroll Addison in swimming and soccer lessons, as well as take her to the zoo and rock climbing gyms – which she considers essential as she is homeschooling her girl. Without the credit, she is looking for a swimming scholarship, as well as cheaper or free after-school options.

“It gave me a bit of a break,” said Washington, 32, who works in program management for a nonprofit group. “It really gave me the confidence to be able to meet basic needs and have a little more to provide my daughter with a better quality of life.”

Exchanges

Losing the monthly credit forced Tamara Harris, 48, to put in more hours as a school bus driver in Indianapolis so she could put gas in the car and food in the fridge for her four children, three of whom are in their early twenties. . But that means she can’t spend as much time caring for two of her children who have sickle cell anemia and are frequently hospitalized.

Recently, she paid a friend to take her 17-year-old son to the doctor so she wouldn’t have to miss work. But then the doctor called and said she should go with him next time.

Tamara Harris added hours of work after losing her monthly child tax credit payment. But now she has to juggle the care of two sick children.

Harris isn’t sure why there’s opposition to extending the enhanced child tax credit, especially the monthly payments, as many parents reinvest it in local businesses.

“It allows us to spend and it helps the economy,” she said. “It’s going up one way or the other.”

Small business owners are also affected by the expiration of enhanced credit.

Take Zondria Lansdowne, daycare owner and Joi’s mother. When monthly payments started last summer, parents flooded her center. She expanded her hours to accommodate those working late at area warehouses, hired additional staff to care for nearly three dozen children, and considered moving to a larger space.

Six months later, the situation is quite different. Families no longer have extra money to pay for child care costs, so they withdraw their children. Lansdowne now has only seven children, which is not enough to cover her overhead costs. She can’t even keep her new granddaughter because she doesn’t have the staff to take care of another baby.

“They used that money to pay me,” she said of the parents. “People have chosen to stay home. The odd jobs that exist — my $75 (weekly fee) are sucking up their paycheck. They just don’t find it worth it.”