Most needy families spent Child Tax Credit money on food
ATLANTA - Six months into the expanded Child Tax Credit, there has been worry this extra money from the government might be used frivolously. But a new study reaffirms what the proponents are saying, that this money is covering the basics for families.
We are going to touch on two big issues with the Child Tax Credit for your 2021 return. We will talk about how you get the second half of that money in the spring in a lump sum. And, how families have used this money since July payments began.
Let’s start here. The Child Tax Credit isn’t new. It’s available annually when you file your taxes. But in the pandemic Congress boosted it a bit, and if eligible, families got the first half starting last July. The IRS sent a deposit each month until the year ended.
But some Americans grumbled and said families were using it for gambling, alcohol, and other things like that. But that prediction has never panned out, at least for the families who needed it most.
Researchers at Magnify Money by LendingTree said 90 percent of their study respondents used it to cover day-to-day expenses. In fact, the top 10 ways it was spent was for the family. The top five reasons were for debt payment, rent, clothing, utilities, and the number one way this money was spent was on food for the family.
Here’s how it breaks down with household incomes.
For families who make less than $25,000 a year, 88.6 percent of recipients used it for those top 10 reasons. By the time you get to the $75,000 to $99,999 income range, 73.9 percent used it for necessities. If the household made more than $200,000 a year, the money used for patching budgets dropped to 46.2 percent.
In order to get that second half of the Child Tax Credit, you get it with your 2021 tax refund. But you must file for it with the IRS.
"The most important thing is to make sure that families with children file their taxes. And they either want to claim the second half of that advanced tax credit, or if you weren’t receiving the advanced payments last year, you want to claim the full amount of that," Ken Tumin of LendingTree told the FOX 5 I-Team.
Mississippi had the greatest need for this additional money. It ranked number one in need. Nearly 27 percent of the families with children received that advanced money. Georgia was ranked 33 for need. The least needy spot was Washington, DC. where just more than 11 percent of parents with children qualified for financial help.