Spending

Millions of U.S. families have gotten up to $1,200 from the Child Tax Credit: Here's how they've used the money

"It's working really well for a lot of families."

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Since July, some 36 million American families have received Child Tax Credit advance payments worth up to $300 per child per month. Eligible families have now received four such payments, including the latest on October 15. New figures from the Census Bureau's most recent Pulse Survey show how households have been spending that money.

Nearly 3 in 5 families, about 58%, spent at least some of their tax monthly tax credits to pay for food, according to the survey results collected between September 29 and October 11. That was up almost 10 percentage points from July, when slightly less than half of families used the money to buy food.

Utilities came in second place, with 33% of recipients using CTC money to pay those bills. Transportation for school, which includes metro and bus fares, came in third place.

Transportation for school is also the category that has seen the biggest change since checks started going out in July, likely reflecting the beginning of the traditional school year: It's increased more than 20 percentage points since the summer.

Families 'can meet their needs as they arise'

The fact that most families are using some of their tax credits to pay for food and other essentials isn't surprising, says Elaine Maag, a researcher at the Urban Institute.

The American Rescue Plan, which President Joe Biden signed into law in March, enhanced the Child Tax Credit in several ways. For 2021, the credit is fully refundable, and depending on taxpayer income, is worth up to $3,600 for children 5 and younger, and a maximum $3,000 for those ages 6 to 17. Eligible families can receive up to half of the credit's value in advance payments spread out from July through December, and claim the remainder of the credit when they file their taxes next spring.

Before that update, families had to wait until filing their taxes to receive any of that money, Maag explains. That system was impractical for many. "Low-income families are no longer having to wait, and they can meet their needs as they arise," she says. "Hopefully, it also means that people aren't getting behind in their bills, and they're able to just make ends meet."

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Maag estimates that the percentage of families using their CTC funds on essential items is actually much bigger than the figures published in the Census Bureau's Pulse data, since that kind underreporting is not uncommon. However, she adds, "we can still pick up the patterns of usage, and those answers tend to give us reliable information."

While survey takers may have difficulty reaching some of the groups receiving the credit, government agencies and outreach groups are succeeding in getting the money to as many people as qualify, Maag says. That includes "communities that are typically left out of programs: rural communities, families that speak English as a second language, very low-income families who don't typically file tax returns."

"They're really doing the work to try to find these people and get them enrolled," Maag says. "It's working really well for a lot of families."

What's next for the Child Tax Credit

The current Child Tax Credit is set to expire next year and is currently the subject of intense negotiation on Capitol Hill as Democratic lawmakers finalize the details of their large "human infrastructure" plan.

Some lawmakers, including Sen. Joe Manchin, D-WV, are proposing significant cuts to the CTC that would go into effect in 2022. Proposed changes include excluding families with income greater than $60,000 and adding a work requirement. If those restrictions are implemented, an estimated 37.4 million fewer children would receive benefits, according to a new analysis from the Niskanen Center.

Lawmakers are also considering extending the enhanced credit for just one year, through 2022, instead of the five years the administration had initially proposed.

Even though legislators are currently debating future iterations of the tax credit, it probably won't be disappearing any time soon, Maag says. "The history of the Child Tax Credit is that it started out small, and it only went to a relatively small slice of middle-income families," she says. "It's been expanded many times. Many of those expansions have been temporary, but every one of them has stayed in the tax code."

To qualify for the full credit in 2021, you must be a single filer with a modified adjusted gross income of less than $75,000, a single parent filing as head of household with a MAGI of less than $112,500, or a married couple filing jointly with less than $150,000 in income. The credit phases out for taxpayers with higher incomes.

Use Grow's calculator below to find out how much your family could get.