News: Families Struggling After Child Tax Credit Payments End
The Child Tax Credit payments ceased two months ago, and families have reverted to financial difficulties.
Contributing Writer at Tally
February 25, 2022
The Child Tax Credit (CTC) was enacted as a part of the Biden administration's American Rescue Plan (ARP) in 2021. This increased the CTC by $1,000 to $3,000 and added a $600 bonus for kids under six years old.
ARP also included a provision that gave families six monthly advanced CTC payments from July through December 2021. But with the CTC advanced payments now over and showing no signs of returning, families are struggling as the reality of their financial situation exposes itself again.
With these payments stopped, let’s look into what your next steps are, how to manage your finances amid red-hot inflation and other tips that can help you get by.
Is there more money coming?
Maybe. The Biden administration attempted to extend the CTC payments for one year in its Build Back Better plan, but hold ups in legislation could be vastly different by the time it passes — if it passes.
But this doesn’t mean there are no more CTC payments. Remember, the payments families received throughout 2021 were only half of the enhanced CTC payout. There’s still the remaining 50% left for qualifying families.
You’ll find out if you qualify for an additional payout when filing your 2021 income tax return. The payout could be into the thousands of dollars, so filing your taxes should be a priority in the first quarter of the year.
This also goes for those who typically don’t file taxes due to not making enough money. For those who fall into this category, you may be eligible to receive the entire payout this tax season if you file a return.
What if I didn’t receive any CTC payments in 2021?
Whether it was due to bank account issues, a lack of a 2019 and 2020 income tax filing or you simply opted out of the CTC payments in 2021, you may still be eligible for the full credit. To determine how much you’re eligible for, complete your 2021 income taxes as soon as possible.
You could get the full credit back in one lump sum if you qualify.
How do I manage my finances without this extra cash?
Over 80% of families reported the CTC payments were important to their financial security and 60% of families surveyed said they can’t afford food for their families now that the checks have stopped.
The problem isn’t only the checks stopping. This is compounded by the highest inflation the U.S. has experienced in 40 years. So, these families are seeing less cash in their accounts, and also dealing with significantly higher prices.
This is the perfect storm for building credit card debt, but that would only stack the odds against you. Instead, try to adjust your budget to compensate for the lack of advanced CTC payments and surging prices. If your budget no longer works, try trimming in areas where possible, such as:
Switching to a lower-cost cellular plan
Downgrading your cable subscription
Canceling streaming subscriptions
Selling your financed vehicle and buying one with cash
You can also mitigate the urge to swipe your credit card by taking on a side gig, like ride-sharing, delivery driving or freelancing.
What does the future hold?
President Biden’s Build Back Better plan is effectively dead in the water, but parts of it can still pass. Only time will tell if one of those parts is an extension of the CTC advanced payments.