Pay off the debt. Take a family vacation. Coverage of childcare costs.
These are just a few of the ways Kansas City families have used the extra income they’ve received this year from monthly federal child tax credits.
Since 1997, most working families have been entitled to an income tax credit based on the number of children in a household. This year, millions of families across the United States have benefited more from the federal program.
The US bailout that the US Congress passed in March in response to the economic disruption caused by COVID-19 has increased the amount families can receive in child tax credits.
Kansas and Missouri congressional representatives voted along party lines. All three Republican representatives from Kansas and six Republican representatives from Missouri voted against the bill. Kansas Democratic Rep. Sharice Davids, who represents the district comprising Johnson and Wyandotte counties, voted for the bill (Rep. Davids is a member of The Beacon. Check out our list of financial backers here).
Democratic representatives from Missouri, Emanuel Cleaver II, who represents the district comprising Kansas City, Missouri, and Cori Bush, who represents the district encompassing St. Louis, voted in favor of the bill.
All Missouri and Kansas senators voted against the American Rescue Plan Act.
Payments for children over 6 have increased from $ 2,000 to $ 3,000 per year. Payments for children under 6 have increased from $ 2,000 to $ 3,600. The US bailout also made it possible for families for the first time to receive money on a monthly basis, rather than as a one-time payment. Families could receive $ 250 per month for each child aged 6 to 17, or $ 300 per month for each child under 6.
âSometimes it takes a lot of time, work and effort just to get a few hundred extra dollars,â said Crystal Everett, a mom from Kansas City, Missouri, who received the monthly payments. “But this one is just, you know, you have a need and the government is here to support it.”
Those automatic monthly payments began in July, landing in bank accounts or mailboxes without requiring most parents to fill out additional paperwork. Families can receive the remainder of the child tax credits owed to them when they file their 2021 tax returns.
Prior to this year, families were eligible for a total of $ 2,000 in child tax credits after filing their income tax return. Couples earning less than $ 150,000 and lone parents earning less than $ 112,500 are eligible for the 2021 extended child tax credits.
But the monthly payments will end at the end of this year, unless Congress passes legislation to extend the credits and extended monthly payments until next year.
Research shows the effects of expanding child tax credits. As of November, the US Treasury Department sent $ 77 billion in payments to millions of families. In Kansas, approximately 321,000 payments were sent in October; payments made since July amount to $ 585 million. In Missouri, 660,000 installments were distributed in October, at a total cost of $ 1.17 billion since July.
The extra payments have provided a cushion for parents like Everett, 34, who has a 4-year-old daughter. Although the family would have done without the monthly payments, Everett said the extra money helped them pay off their debts.
âIf we didn’t have this thing, we’d still be fine,â Everett said. âBut it just helped us speed up our debt reduction, which just allows us to pay off the credit cards. “
Monthly payments used for additional expenses, paying bills
After Crystal Henry from Merriam, Kansas gave birth to her second child in September 2020, she spent the first months of this year working from home and looking after her baby. Her 5 year old daughter was in daycare. Her husband worked full time.
But the arrangement was not financially viable. So Henry, 39, put his baby in full-time daycare in May and returned to work. But even with a second income, childcare costs swelled the family budget.
âThe bills are just astronomical,â Henry said. âIt’s much higher than our mortgage payment. “
Childcare costs for an infant and a 5-year-old child represent about 20% of Henry’s household income.
Child tax credits that began in July have provided her and her husband with additional income each month to pay for these expenses, and more. Henry said they used some of those early payments to take the family’s first vacation since the pandemic began.
âWe have planned a little weekend getaway to Omaha,â said Henry. âSo that kind of gave us a buffer to do something fun. “
After the family traveled, they used child necessities tax credit payments.
âBut pretty soon it became necessary to pay the bills,â Henry said. âJust little things, like having to replace tires and get dental work done – all of those things that you don’t necessarily anticipate. We hoped it would give us just a little more leeway – which he did – but it went from spending extra money to paying the bills pretty quickly. “
Tax credits were especially helpful this fall, when Henry’s husband contracted COVID-19 and was out of work for a week and a half. He works as a contractor and has not had paid time off.
Without the child tax credit audit, Henry said his family should have considered taking on debt to cover unforeseen expenses and dramatically cut spending. The tax credit payments provided a safety net, she said. Henry hopes Congress will extend tax credits until next year, to help families like his.
âIt’s these unforeseen car costs and things we were really unprepared for,â Henry said. âI already have the impression that we have reduced the additional expenses. We don’t really eat out and don’t really have a lot of extra spending, but we would really cut any discretionary spending really drastically. “
Basic needs met with advance payments of the child tax credit
For Bruno Silva, 34, of Kansas City, Missouri, monthly child tax credits have meant putting more money aside for his wife and two daughters – to save for emergencies, future expenses or family vacation.
Among other costs, Silva said the monthly payments allowed her to complete a kitchen remodeling project that would otherwise have had to wait until next year.
âWhen we had the extra money, we were less concerned with meeting the most basic needs,â said Silva. âLike diapers, which can be expensive, or going to the doctor. When we don’t have to worry about these costs,â¦ we can indulge ourselves from time to time.
Silva notes that there aren’t many federal policies that directly provide relief to families like hers. And he knows how expensive it can be to raise children.
Before having children, Silva worked full time and his wife had two part time jobs. Both continued to work after the birth of their first child. But it got more difficult when their second child arrived.
Child care for the two children was too expensive to be an option. Silva said his wife’s part-time income would not cover the cost. She quit her part-time jobs and now looks after the children during the day while Silva works full time.
âI had researched and researched sending kids to daycare even before COVID – it’s very expensive,â he said. “I mean, the amount of the monthly mortgage payment in my house is not as high as what I would have paid for a month of child care.”
The Silva and Henry families aren’t the only ones facing the barriers of expensive child care. According to the Economic Policy Institute, the average annual cost of infant care in Missouri is $ 10,041 to $ 837 per month. For a 4 year old child, the average cost of child care is $ 7,014. In Kansas, the average annual cost of infant care is even higher: $ 11,222.
âIt puts the biggest burden on the parents,â Silva said.
Bill to extend child tax credits stalled
Monthly child tax credit payments are expected to end this month, unless Congress acts to extend them. The credit expansion is included in the Build Back Better Act – a $ 2 trillion program that would also fund expanded child care, reduced health care costs, and climate change programs . The bill was passed by the United States House in November and still sits in the Senate.
Rep. Sharice Davids (D) was the only representative from Kansas to vote for the Build Back Better Act; all three Republican representatives voted against the bill. In Missouri, Democratic Representatives Emanuel Cleaver and Cori Bush also voted for the bill, while the state’s six Republican Congressional Representatives voted against.
Recent Washington Post reports said Democrats in the Senate hoped to vote on the bill before Christmas. But the bill faces opposition not only from Republicans, but also Democrats like West Virginia Senator Joe Manchin, who has not expressed support for the legislation.
Representative Davids supports expanding child tax credits.
âWe’ve seen the benefits – fewer children are going hungry right now, fewer people are living in poverty,â Davids said. âSome people can go back to work because they now have the means to look after their children. And so I think for me the important parts of that are how it has a direct impact, especially in light of the pandemic. “
Davids has seen the impact of the expanded tax credits in his district. According to research by the Joint Economic Committee, 91,000 payments have so far been sent to the 3rd Congressional District of Kansas, for a total of $ 37.9 million.
âIt’s leeway so many people are so dependent on right now,â Davids said. âThe number of families who can access child care, get gas, meet some of these important needs that everyone has. “
This story was originally published by The Kansas City Beacon, an online medium focused on local journalism and deep in the public interest.
Find the original article here.