Monthly tax credits end, leaving some NC families forced to make cuts

Samantha Kummerer Image
BySamantha Kummerer WTVD logo
Tuesday, January 18, 2022
Monthly tax credits end, leaving some NC families forced to make cuts
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January is the first time in six months that North Carolina families will not receive a child tax credit.

DURHAM, N.C. (WTVD) -- January is the first time in six months that eligible North Carolina families will not receive their child tax credit.

"This is going to be a really difficult time for families as they make some choices about how they pay their bills, how they support their children," said David Reese, the president and CEO of the Durham Children's Initiative.

The Durham Children's Initiative aims to increase equity for families throughout Durham. Reese said he fears ending this credit may leave some families in a worse position than before the pandemic.

"I think families are going to have to make cuts. During the beginning of the pandemic, when so many of our community members lost their jobs, we started emergency food distributions with some of our partners, and those numbers had drastically reduced. One of my concerns is that food insecurity will increase, and we'll have to resume supporting families in that way," Reese said.

The monthly deposit ranged from $300 for children under 6 years old to $250 for older children. The credit was part of President Joe Biden's $1.9 trillion COVID-19 relief package but Congress did not approve extending the credit. The IRS estimated more than 36 million families received the payments monthly.

The U.S. Census Bureau found families spent much of the money on school expenses. Around 30% of families spent the deposit on school supplies and 25% of those with younger children spent the money on child care, according to the U.S. Census' Household Pulse Survey in October. The survey also found around 40% of households used the credit to pay off debt.

Local community leaders said families they know are using the money to pay for rent and food.

"When parents are using the child tax credit to pay for food, we know that our families and kids are in trouble," explained Michelle Hughes, the executive director for NC Child, a nonprofit that advocates for public policy that improves children's lives.

In addition to providing families with a little extra spending money, experts said the tax credits improved the child poverty rate across the country.

Research from Columbia University estimated child poverty rates decreased by 30% across the nation.

In North Carolina, Hughes said the extended credits were estimated to lift 140,000 children out of poverty.

"We are very worried about what's going to happen to those children and families when they aren't able to access that assistance," she said.

The Centers on Budget and Policy Priorities estimated when the increased payments go away, nearly 10 million people will slip deeper into poverty.

"Here in Durham, the child poverty rate is above 20%. And that's with folks who are working every single day as essential workers," Reese said. "When we remove that tax credit and we continue to battle with COVID-19 in our economy that creates tremendous challenges for families."

The tax credits end at the same time federal rental assistance funds are drying up and the cost of living continues to increase.

"Right at a time when they most need the additional money, that's when they're going to be losing it and we're really worried about the impact on children, on their health on their education, and just their well-being overall," Hughes said.

Hughes and Reese said the pandemic shined a light on some of the needs but more assistance was needed even before 2020.

"Families were not doing fine before the pandemic. Almost half of our children in North Carolina live in poor or near-poor families. And for Black and Latino children, that's an even higher number, so the extended child tax credit made a huge difference for families and particularly families of color." Hughes said.

While the decision to extend the tax credits rests with Congress, Hughes said there are things that can be done. She said residents can write and call their senators urging them to vote to extend the credits.

At the state level, she said leaders can reinstate the earned income tax credit and better fund child care.

"One of the biggest expenses for families is affordable childcare, and right now families can't find affordable care, and they're unable to go back to work. So there are definitely investments that the North Carolina legislature can make to help kids and families," Hughes said.

For families in need, Hughes recommends reaching out to local departments of social services and getting in touch with a community action agency.