From Car Repairs to Cub Scout Uniforms, Here's How Parents Are Spending Their Child Tax Credit Payments
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Car repairs, dental work, rent — the ways parents are using their new child tax credit payments are as varied as you’d expect. But while individual families are spending the money in different ways, the sense of relief low- and moderate-income households are reporting is almost uniformly similar.
The second of six advanced child tax credit payments went out to about 36 million households on Friday, providing families with up to $300 per child. The changes to this year’s child tax credit were designed with the goal of lifting “millions of children out of poverty.” And early indicators seem to show that the efforts are already starting to work: Food insecurity dropped by 24% for families with children after the July payment, whereas childless homes actually saw a slight increase.
These changes are only temporary so far; unless Congress votes to extend the measure, the enhanced child tax credit will only be in effect for 2021. But for many struggling families, the monthly payments are already helping them to turn their financial situations around — sometimes in ways they never before thought possible. Here are four of their stories:
Much-needed help where there once was none
Sandy Westrand, a retiree and grandmother in Spokane, Washington, doesn't have any particularly dramatic words to describe just how dramatic an effect the expanded child tax credit has had on her life.
The money has been "huge for us," she says.
She’s been the primary caretaker for her now 9-year-old grandson, Izaak, since he was less than a year old. After his father died, Westrand legally adopted him. While she had initially been working full-time at Costco, the hours made it impossible for her to care for Izaak, ultimately leading her to retire earlier than expected.
“There was no daycare available and if there was I probably could not afford it,” she says.
Westrand and her grandson now live off of disbursements from her modest 401(k) and Social Security income, as well his small Social Security Survivors Benefits payments. Although she still has to pay taxes each year, Westbrook’s income has been too low to qualify for the child tax credit or Earned Income Tax Credit.
But Westrand also earns too much to be eligible for benefits like free and reduced lunch or the Supplemental Nutrition Assistance Program (SNAP), meaning she has had to pay out of pocket for nearly all of Izaak’s expenses.
“We’re not eligible for any of the things that are supposed to help families with children,” she says.
This year, though, the government removed the minimum income requirements to receive the credit, making Westrand eligible for the first time. She’s now receiving an extra $250 a month to help with regular expenses, and when she files her taxes next spring, she’ll get the remaining $1,500 of the credit added to her tax refund.
Less pain from surprise bills
When Rebecca Garcia’s car broke down in early July, it could’ve been disastrous if not for the advanced child tax credit. Garcia, a mother of four from Las Vegas, works part-time so she can spend more time with her children, so their family relies primarily on her husband’s income without much to spare each month. On top of that, she was forced to take unpaid time off due to being on bed rest, recovering from a surprise back surgery.
Their first monthly payment made the entire situation with the car a non-issue. Garcia didn’t have to worry about working the expense into the family’s already-tight budget.
“Being the one who’s managed my family’s budget for years, there can be a lot of stress,” she says.
According to the Federal Reserve, around 40% of Americans could not cover an unexpected $400 expense without carrying a balance on their credit card. A few extra hundred dollars a month could help families weather potential money emergencies, which Garcia says happens far more often when you have multiple children.
“Those extra costs seem to come up more than a couple of times a year. It’s more like every month,” she says.
Those surprise bills are something Yehesuah Downie, a Washington, D.C.-based freelancer and political organizer, knows well. After losing his job and primary income as a bartender, Downie was able to live comfortably off of his savings for the first few months of the pandemic. But after the 2020 election season was over, job opportunities dried up.
“I was living off of photography and videography [gigs], which definitely wasn’t enough to pay the bills,” says Downie, who recently began working as a fundraising director for groups like Greenpeace and the ACLU.
He has a 12-year-old son who primarily lives with his mother, but Downie is responsible for most of his son’s financial needs. When the boy’s phone broke earlier this year, Downie says he struggled to scrape the money together to replace it.
“I was borrowing money from everybody, but it’s hard to even ask other parents for help because they’re often in a tight spot too,” he says.
Despite finding full-time work again in late June, he was still trying to get back on his feet and pay off outstanding bills when the first child tax credit payment hit.
“The money came in and I just straight away paid off our phone bills.”
Paying rent and maintaining stability
Jenna Fulford, a resident of St. Paul, Minnesota, was skeptical about the monthly child tax credit payments when she first heard about them. As a single mother working in mental health services and trying to provide for her 14-year-old daughter, she says she felt let down when some members of Congress promised to provide additional pay for essential workers, only for it to never come to fruition.
“We didn’t get raises, but my rent was raised again this year, so it’s been paycheck to paycheck for a while,” Fulford says.
She was worried she’d have to give up her apartment. But after the first payment was deposited, she’s been able to breathe a sigh of relief knowing that she’ll be able to pay rent more easily and not be forced to uproot her daughter’s life.
“I’ve been in my place for 17 years, I've raised all my kids here,” Fulford says. “I want to set my daughter up for success and when you have to move around and don't have stability, that can be really hard.”
A 2010 study from the American Psychological Association of over 7,000 people backs those concerns. In their results, researchers found that the number of times people moved around as children correlated with lower levels of life satisfaction and psychological well-being.
Downie also stressed how monthly payments can give children more stability and consistency.
“It helps children perform in school if the household is in a better financial situation because they have a better diet or parents who can spend more time with them instead of picking up extra shifts," he says.
Saying yes to what was once too expensive
Beyond basic necessities like food, clothing and shelter, the child tax credit payments are helping some families cover the sorts of extracurricular activities and hobbies that they simply couldn’t afford before.
While Westrand’s first child tax credit payment had to go toward paying off a $1,600 dental bill after Izaak needed a root canal for a broken tooth, this month’s money will help pay for his Cub Scouts uniform and school clothes. After that, she’s hopeful that she’ll be able to pay for some of the after-school programs he’s asked to do in the past, like clay sculpting classes.
“There’s been a couple of times where I’ve had to say ‘Sorry buddy, but we don’t have the money this month,’” Westrand says. “It’s hard because kids that age don’t understand why you can’t just pay for it.”
It's not just hard on the kids. Parents say it takes an emotional toll to have to repeatedly deny their children opportunities other kids have.
“Obviously, as a father, it’s tough because I was unable to do the things I wanted to do for my son,” Downie says. “Now that I have regular income, my plan is that whatever I get from [the credit] is going to go straight toward whatever he needs or wants.”
Parents say the monthly payments should be permanent
The enhanced child tax credit is currently a temporary expansion, one that starts and ends in 2021.
Although the Biden administration and congressional leaders have committed to extending the larger credit and advanced payments through at least 2025, the program will likely have to be fought for, as Republicans and moderate Democrats raise concerns over government spending.
Plus, giving parents direct cash benefits can be a contentious topic. Sens. Marco Rubio (R-FL) and Mike Lee (R-UT), for example, have argued that the measure is not “pro-work”. Other pundits have expressed concerns over whether the monthly payments could incentivize more low-income workers — specifically mothers — to leave the workforce.
Even the general public has some doubts. As of right now, only 29% of Americans believe the expansion and monthly payments should be made permanent according to a July poll from YouGov, although some experts predict that favorability will increase over time.
Westrand thinks it’s important for people to understand how many others there are like her, who care for grandchildren full-time but don’t qualify for any of the same benefits as young, working parents do. Around 2.4 million grandparents serve as their grandchildren’s primary caregivers, and more than 40% of them report having unmet economic and social support needs. The enhanced child tax credit is the first time many of them have been able to receive any childcare-related government support at all.
“It needs to be made permanent and it needs to be kept so that those of us who are lower income can benefit from it,” Westrand says.
Of course, the benefits do serve more than just senior guardians. Data from the Census Bureau’s latest Household Pulse Survey have already shown a marked decrease in the number of families who reported not having enough food at home or experiencing difficulties paying bills after the first payment went out.
The best advocates might end up being the families themselves, for whom the monthly payments have helped to ease some of the burdens that come with parenthood. Fulford, the single mother from Minnesota, says she plans to do whatever it takes to push for a permanent expansion of the credit.
“It’s an awesome thing to help parents put food on the table and keep a roof over their heads,” she says. “So if they’re not going to give us raises, I’ll take this."
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