Jen Cousins, center, with her husband Matt and their children Noel, 13, Saffron, 12, Milo, 8 and Poppy, 6.
Without a child tax credit payment in January, Jen Cousins will have to wait a few more months to replace the brakes on her van, the only car her family of six owns.
Cousins, 44, a stay-at-home mom in Orlando, Florida, has been given full credit for each of her four children ages six, eight, twelve and thirteen in the past six months. She has spent most of the extra money on medical bills – the whole family wears glasses, one child needs prescription eye drops and speech therapy and soon her oldest children will need braces. .
Her husband, Matt, 43, works as a software architect and has work-based insurance, but that only covers him, so the family pays nearly $1,000 a month to insure Jen and the kids, she said. declared. In addition, additional disbursements always occur.
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“When you have four kids, weird things happen all the time,” she said. “Someone breaks something, and you have a $400 ER visit that you have to pay.”
Without the credit, her family budget will shrink significantly, she said. Some 35 million families with 65 million children face the new year without a generous tax cut.
“We can already feel the pinch,” she said of missing a single monthly check. “It’s about where are we going to cut things, because that’s been a really good support system for us over the last six months.”
The enhanced tax credit for children
In March 2020, the passage of the US bailout improved the existing child tax credit, increasing the benefit from $2,000 to $3,000 and adding $600 for children under 6 for the year tax 2021.
The first half of the credit was given to families through monthly checks that began in July and continued through December. The second half will come when people file their 2021 tax returns this year.
If the benefit had been extended, as Democrats proposed in the Biden administration’s Build Back Better plan, another check would likely have been sent the second week of January.
“After only six months of payments, the evidence is clear. The expanded and improved Monthly Child Tax Credit, a policy I’ve been working on since 2003, is working,” said Rep. Rosa DeLauro, D-Ct. “It was a lifeline for the middle class – the biggest middle class tax cut we’ve seen in generations – and lifted 50% of children out of poverty.”
But the legislation was blocked in the Senate by moderate Democrat Joe Manchin, DW.Va. One of Manchin’s issues is the Child Tax Credit, which was made fully refundable in 2020, meaning a family can claim it even if they have no earned income. Manchin opposes this and has proposed adding a work requirement in the future.
To advance the rest of the $1.75 trillion proposal, Biden can split parts of the bill and attempt to push it through in pieces. It is uncertain whether the child tax credit will remain in law, he told reporters on Wednesday.
“I think we can split the pack, get as much as we can now and come back and fight for the rest,” he said.
What happens without the credit
Without the credit, advocates fear the benefits from monthly checks will be reversed. Some 10 million children will likely fall back below the poverty line, according to the Center on Budget and Policy Priorities, a progressive think tank.
There are also fears many are going hungry because early Census Bureau data showed the Child Tax Credit led to a rapid decline in food insecurity, said Elaine Maag, senior research associate at Urban-Brookings. Tax Policy Center.
In addition, the loss of parts of the subsidized credit, such as full repayment, leaves millions of children behind, including those from the poorest households. It also disproportionately prevents black and Latino children from receiving the credit.
Of course, the child tax credit will not disappear entirely. Some families will still be able to claim the previous lower credit next year. It is also important that all families with eligible children file taxes this year to claim the second half of the credit, or the full credit if they did not receive advance payments.
And, the data showed that some families were able to use the credit to save or pay off debt, which hopefully means they are now in a better financial position, Maag said.
Democrats are still battling to pass Build Back Better, but it’s unclear if the enhanced child tax credit will be included. In early January, Manchin — whose Democrats must vote to pass the legislation — said he had had no discussions about resuming negotiations on the bill.
“There’s a way forward. I’m optimistic that we can get that finish line tax cut,” DeLauro said. “We can’t stop now. We can’t lose hope. We can’t give up the fight.”
There may also be some potential for credit to be enhanced by other laws, potentially even in a bipartisan way. Sen. Mitt Romney, R-Utah, proposed a bill last year that would replace the existing child tax credit, but continue monthly checks to families for each eligible child.
Sen. Josh Hawley, R-Mo., proposed a parent tax credit last year, which would provide a fully refundable tax cut to working parents and retain monthly advance payments.
So far however, there has been little movement on bipartisan legislation. For now, families cannot count on monthly checks returning anytime soon.
Alana Truss, 39, who works as a health care system analyst in Las Vegas, predicts the credit will be permanently lost while hoping it will return.
“I don’t want to plan this and have it not happen,” she said. She and her husband, who works for the Social Security Administration, also have a 19-year-old daughter in college whom they support. “I’m just going to have to be very careful about spending.”
Truss received the full credit for her 14-year-old son and used it to cover rising costs for groceries and gas. Without the credit, her budget will be much tighter, she says, not least because the family’s rent has recently been increased.
“Not having that extra cushion was a bit unnerving,” Truss said.
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