The child tax credit was a lifeline. Now that it’s over, families are struggling: NPR

In January, the first month without deposits, 3.7 million children fell into poverty.

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In January, the first month without deposits, 3.7 million children fell into poverty.

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When Sarah Anderson lost her two jobs during the pandemic, money dried up and stress set in.

So the extra income from the expanded child tax credit has been a lifeline.

“The money wasn’t replacing that income, it was just helping to keep everything afloat,” she said.

The Durham, NC mother-of-four used it to pay for basics like food, gas and bills. But that safety net disappeared in December after Congress failed to renew the program as part of the Build Back Better plan.

“To lose that money, especially when the price of everything has skyrocketed…I feel really let down by this country,” Anderson said.

“I go to bed at night wondering how are we going to pay all these bills this month. And I just don’t want my kids to feel that stress.”

Anderson is not alone. The child tax credit payments filled the gaps in child hunger and poverty across America. And in the months since their end, there is evidence that the families who needed the money the most have already fallen back into financial hardship.

The end of payments comes up against rising costs

The impact of stopping monthly payments was extremely rapid, according to an assessment of the Columbia Center on Poverty and Social Policy’s monthly tracker.

He estimated that 3.7 million children were lifted out of poverty by December when the last child tax credit payment was made. In January, the first month without deposits, 3.7 million children fell into poverty.

Congress did not renew the expanded child tax credit as part of the Build Back Better plan.

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Congress did not renew the expanded child tax credit as part of the Build Back Better plan.

Olivier Douliery/AFP via Getty Images

“We have about $34 left in our bank account,” says Amy Jean Tyler of Crestwood, KY.

Her husband was made redundant last year and she said child tax credit had been their only reliable source of income for months. Now, she says, they live from week to week, “sometimes waiting for unemployment checks that don’t always arrive on time.”

One of the most significant impacts of the program has been observed in food security. According to an analysis of Census Bureau data, after the first payment, the number of adults saying their household did not have enough to eat fell from 10.7 million to 7.4 million.

And the loss of monthly payments has been met with rising prices for housing, food and gas.

AJ Wilbur manages eight rental units in a small town in Bradford County, Pennsylvania, and said that in the six months the tax credits were paid, no one was behind on rent or public services. But the month after the program expired, everyone fell behind again.

“Three of the rentals have young children, two of whom are single working mothers,” he said. “I just got notices this week that these two still have overdue water and sewer bills. One is over $200 and the other is over $170. Very high for this area.”

He said his tenants had to choose which bills to pay right now, and with hard-to-find homes in the area, they were prioritizing rent over utilities like power and water.

The dilemma of childcare and the “high cost of poverty”

Elizabeth Ananat is an economist at Barnard College who has been tracking the effects of the child tax credit expansion since the first installment in July. One of the things she focused on was the idea that the payments would convince people to leave the workforce.

“We pushed and pulled the data all over the place trying to see if we could find parents dropping out of the workforce because now, you know, they have this money,” she said. “And we haven’t seen any evidence of that.”

The loss in monthly payments came as inflation pushed food and gas prices higher.

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The loss in monthly payments came as inflation pushed food and gas prices higher.

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And given that child care was one of the most common ways families spent the money, losing child tax credit payments could actually be costing people their work.

A woman who went by the name “Fallon” for privacy reasons said she was worried her boss would fire her if she continued to miss work because she couldn’t afford a babysitter. And Caitlyn Overacker in Fairbanks, AK, said without the tax credit to help offset the cost of daycare for her five children, she was considering quitting her job at the local library.

“I really love my job,” she said. “That would be a real shame.”

Ananat said there’s also a key difference between spreading monthly payments and a lump sum at tax time: Low-income families don’t always get the same amount of money each month.

Having this reliable repository can make a big difference, especially in times of emergency, job loss, or even unstable schedules. Families without savings might need to turn to credit cards or loans, or miss payments altogether, facing interest and late fees.

“It’s kind of the high cost of poverty,” Ananat said. “Getting money at tax time is helpful, but it’s hard to smooth that out over the year when you don’t know what’s going to happen and you can’t predict when you’re going to be in trouble. “

She hopes the program will return, with a combination of monthly payments and a lump sum at tax time, as many low-income families ended up getting more money last year.

Taxes are due April 18, so many families still have the remainder of the child tax credit as part of their annual refund. Some cities have or plan to implement their own versions of guaranteed income, and President Biden also called for the reinstatement of upfront payments in his State of the Union address.

But so far, there are no signs of the program returning.