Thanks to the extension of the Child Tax Credit (CTC) contemplated in the American Rescue Plan, families with children under the age of 6 are eligible for a payment of up to $ 3,600, while families with children ages 6 to 17 can receive up to $ 3,000 for each child.
The Internal Revenue Service (IRS) will send half of the amounts in six monthly payments of $ 300 and $ 250 for each child or dependent. The rest of the money will be released until 2022 after the 2021 tax returns are processed.
The CTC extension was designed to provide additional support to American families facing financial hardship from the pandemic and the first studies and surveys show that everything is on the right track.
How has the child tax credit affected family income in the US?
Based on the results of some surveys, it can be concluded that payments are having a positive effect on American society, since thanks to these, family income has increased and child poverty and food insufficiency have decreased.
According to the Office of Economic Advisers of the Department of Commerce, personal income increased 1.1% ($ 225.9 billion) in July. At the same time, disposable personal income increased 1.1% ($ 198 billion) and personal consumption expenses increased 0.3% ($ 42.2 billion).
On the other hand, according to a survey conducted by Parents Together Action, a national organization for parents, the first CTC payment meant a reduction in financial anxiety for 56% of the families who received the money.
According to a study by the Census Bureau, held between August 4 and 16, the number of adults living in households with children who did not have enough income to eat was reduced by 3.3 million. This represents a decrease of almost a third and a reduction in American households suffering from food insufficiency.
How do families use CTC payments?
According to the Household Pulse Survey (HPS), conducted by the Census Bureau, families spend their payments on more than one thing, but mostly on food and child care.
Other surveys show a similar use of money. According to data from July MagnifyMoney, 45% of parents spent the first payments on food, 44% on school supplies, 38% on savings and 36% to pay household bills.