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Paying down debt. Taking a family vacation. Defraying child care costs.
These are a few of the ways Kansas City families have used extra income they received this year from monthly federal child tax credits.
Since 1997, most working families have been eligible for an income tax credit based on the number of children in a household. This year, millions of families across the U.S. benefited more from the federal program.
The American Rescue Plan that the U.S. Congress passed in March in response to economic disruptions caused by COVID-19 increased the amount families can receive from child tax credits.
Kansas and Missouri’s Congressional representatives voted along party lines. Kansas’ three Republican representatives and Missouri’s six Republican representatives voted against the bill. Kansas Democratic Rep. Sharice Davids, who represents the district including Johnson and Wyandotte counties, voted for the bill (Rep. Davids is a member of The Beacon. View a list of our financial supporters here).
Missouri’s Democratic Reps. Emanuel Cleaver II, who represents the district including Kansas City, Mo., 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 older than 6 were increased from $2,000 to $3,000 annually. Payments for children younger than 6 were increased from $2,000 to $3,600. The American Rescue Plan also for the first time enabled families to receive money monthly, rather than as a one-time payment. Families could receive $250 a month for every child age 6 to 17, or $300 a month for every child under 6.
“Sometimes it takes a lot of time and work and effort just to get an extra few hundred dollars,” said Crystal Everett, a Kansas City, Mo., mom who’s been receiving the monthly payments. “But this one is just simply, you know, you have a need and the government is there to support it.”
Those monthly, automatic payments began in July, landing in bank accounts or mailboxes without requiring most parents to fill out extra paperwork. Families can receive the remainder of the child tax credits they are due when they file their 2021 income taxes.
Before this year, families were eligible for a total of $2,000 in child tax credits after filing their taxes. Couples making less than $150,000 and single parents earning less than $112,500 qualify for the expanded 2021 child tax credits.
But the monthly payments will end at the close of this year, unless Congress passes legislation to extend the expanded credits and monthly payments into next year.
Research is showing the impacts of the expanded child tax credits. As of November, the U.S. Treasury Department has sent out $77 billion worth of payments to millions of families. In Kansas, about 321,000 payments were sent out in October; payments since July add up to $585 million. In Missouri, 660,000 payments were distributed in October, for a total cost of $1.17 billion since July.
The extra payments provided a cushion to parents like Everett, 34, who has a 4-year-old daughter. Though the family would’ve gotten by without the monthly payments, Everett said the additional money helped them pay down debt.
“If we didn’t have this thing, we would still be fine,” Everett said. “But it’s just helped us accelerate our debt reduction, so just being able to pay off credit cards.”
Monthly payments used for extra spending and paying the bills
After Crystal Henry of Merriam, Kansas, gave birth to her second child in September 2020, she spent the first months of this year working from home and caring for her baby. Her 5-year-old daughter was in child care. Her husband worked full time.
But the arrangement wasn’t financially sustainable. So Henry, 39, put her baby into full-time child care in May and returned to work. But even with a second income, child care costs stretched the family’s budget.
“The bills are just astronomical,” Henry said. “It’s way higher than our mortgage payment.”
Child care costs for an infant and a 5-year-old take up about 20% of Henry’s household income.
The child tax credits that began in July provided her and her husband additional income each month to pay those expenses, and then some. Henry said they used some of those first payments to go on the family’s first vacation since the pandemic began.
“We planned a little weekend getaway to Omaha,” Henry said. “So it kind of gave us a buffer to do something fun.”
After the family’s trip, they used the child tax credit payments on necessities.
“But very quickly, it became necessary to pay the bills,” Henry said. “Just little things, like needing to replace tires and having some dental work done — all that stuff that you don’t necessarily plan for. We were hoping that it would allow us just a little bit more breathing room — which it did — but it went from extra spending to paying the bills pretty quickly.”
The 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 didn’t have paid time off.
Without the child tax credit check, Henry said her family would’ve had to consider going into debt to cover unforeseen expenses and significantly cut back on spending. The tax credit payments provided a safety net, she said. Henry hopes Congress extends the tax credits into next year, to help families like hers.
“It’s those unforeseen car costs and things that we really weren’t prepared for,” Henry said. “I already feel like we’ve cut back on additional spending. We don’t really go to restaurants and we don’t really have a lot of extra spending, but we would just really be pulling back on any discretionary spending significantly.”
Basic needs addressed through advanced child tax credit payments
For Bruno Silva, 34, of Kansas City, Mo., the monthly child tax credits have meant putting more money aside for his wife and two daughters — to save for emergencies, future expenses or a family vacation.
Among other costs, Silva said the monthly payments allowed him to finish a kitchen renovation project that would have otherwise had to wait until next year.
“When we have the extra cash, we were less concerned about having the most basic needs addressed,” Silva said. “Like diapers, which can get pricey, or doctor’s visits. When we don’t have to be so worried about those costs, … we can treat ourselves from time to time.”
Silva notices there aren’t many federal policies that provide direct relief to families like his. And he knows how expensive it can be to raise children.
Before having kids, Silva worked full time and his wife had two part-time jobs. Both continued working when their first child was born. But that became more difficult when their second child arrived.
Child care for both kids was too expensive to be an option. Silva said his wife’s part-time earnings wouldn’t cover the cost. She quit her part-time jobs and now watches the kids during the day while Silva works full time.
“I’d been looking and doing research about sending kids to day care even before COVID — it’s very expensive,” he said. “I mean, the amount of the monthly mortgage payment in my house is not as much as I would have paid for one month of day care for the kids.”
The Silva and Henry families aren’t alone facing the barriers of high-cost child care. According to the Economic Policy Institute, the average annual cost of infant care in Missouri is $10,041 — $837 per month. For a 4-year-old, the average cost of child care is $7,014. In Kansas, the average annual cost of infant care is even higher: $11,222.
“That puts the biggest burden on the shoulders of parents,” Silva said.
Bill to expand child tax credits stalled
The monthly child tax credit payments are set to end this month, unless Congress acts to extend them. Expanding the credits is included in the Build Back Better Act — a $2 trillion package that would also fund expanded child care, lowered health care costs and programs to combat climate change. The bill passed the U.S. House in November and is still sitting in the Senate.
Rep. Sharice Davids (D) was the only Kansas representative to vote for the Build Back Better Act; the three Republican representatives voted against the bill. In Missouri, Democratic Reps. Emanuel Cleaver and Cori Bush also voted for the bill, while the state’s six congressional Republican representatives voted against it.
Recent reporting from The Washington Post said Democrats in the Senate are hoping to vote on the bill before Christmas. But the bill faces opposition not only from Republicans, but also Democrats like Sen. Joe Manchin of West Virginia, who has not voiced support for the legislation.
Rep. Davids supports expanding the child tax credits.
“We’ve seen the benefits — fewer kids are going hungry right now, fewer folks are living in poverty,” Davids said. “Some people are able to go back to work because now they can afford child care. And so I think that, to me, the important pieces of that are the ways that it’s having a direct impact, especially in light of the pandemic.”
Davids has seen the impact of the expanded tax credits in her district. According to research from the Joint Economic Committee, 91,000 payments have been sent out so far in Kansas’ 3rd Congressional District, totaling $37.9 million.
“That’s a breathing room that so many people are just so dependent on right now,” Davids said. “The number of families that are able to access child care, get gas, address some of these important needs that everybody has.”