Have you received your August Child Tax Credit payment yet? The IRS began issuing the new round of monthly Child Tax Credit payments last week, so if you haven’t received your second advance payment on the tax credit, you may want to keep an eye on your mailbox or bank account. More money could be headed your way in the very near future.
This new round of payments is the second to be issued to parents and children who qualify under the income guidelines for the tax credit. The direct monthly payments, which are worth $250 to $300 per dependent, first started rolling out in July, and are slated to continue through December 2021.
While the system for issuing these payments hasn’t been perfect, the money has already helped millions of lower- and middle-income families make ends meet over the last couple of months. In fact, a new study shows just how much of a buoy the advance tax credit money has been for families in need. Here’s what the money has helped with thus far.
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The effect of the Child Tax Credit on food insecurity
According to a new Census Bureau Household Pulse survey, there was a significant drop in the number of households with children that reported food insufficiency shortly after the first monthly Child Tax Credit payment was issued. And, per the report, that drop may be directly linked to the advance tax credit checks.
As part of the survey, the Census Bureau collected responses from households that qualified for the Child Tax Credit just prior to and after the arrival of the first checks. What the responses showed was that the tax credit payments coincided with a drop in food insufficiency in those households.
Prior to the July tax credit being issued, about 11% of households with adults and children reported dealing with food insufficiency. After the checks were issued, the percentage of households with adults and children facing food insufficiency dropped by about 3%.
That’s a huge decline in food insufficiency for families with children, who are statistically more at risk for food insufficiency than other types of households.
Adults in households without children, on the other hand, did not see a change in food insufficiency during the same period, which means it’s likely that the driving factor behind the decline in food insufficiency in households with adults and children was the tax credit money they received.
The effect of the Child Tax Credit on financial hardships
The survey didn’t just show a change in food insufficiency for many households, though. The data also showed that the July Child Tax Credit payments may have led to a drop in difficulty with paying weekly expenses for households with adults and children.
Respondents were asked about how difficult it was to pay their usual household expenses from June 23 to July 5, which was the week prior to the survey. About 31.5% of adults in households with children said that it was somewhat difficult or very difficult to pay their household expenses during that time.
But, the percentage of households with adults and children reporting that it was somewhat or very difficult to pay their household expenses dropped to 29%, or about 2.5 percentage points, for the week of July 21 to Aug. 2, which was the week following the issuance of the advance Child Tax Credit payments.
In contrast, the percentage of adult-only households reporting difficulty paying expenses did not decrease during the week of July 21 to Aug. 2. It increased.
About 20.8% of adult-only households reported these financial difficulties during the week of June 23 to July 5. And, about 21.8% of these same households reported difficulties the week following the July Child Tax Credit payments being issued.
This again shows that it’s likely that the Child Tax Credit money, which went to households with children and dependents, was likely to be the cause of the decline in financial difficulties for households with adults and children.
What households spent the July Child Tax Credit money on
Given the decline in food insufficiency, it’s not surprising that the survey showed many households spent the Child Tax Credit money on food in July. According to the report, about 47% of survey respondents reported spending the money they received on food.
And, food wasn’t the only necessity that was paid for with the Child Tax Credit money. Nearly 10% of adults in households that received the July payment — and about 17% of households with at least one child under age 5 — spent their Child Tax Credit money on childcare.
How to take advantage of the Child Tax Credit payments
If you haven’t received the July or August Child Tax Credit payments but think you may qualify, it’s not too late to take advantage of them. The IRS has made it easy to update your income or dependent information online, or to file for the credit as a non-filer.
If you have non-filer status, you can submit your information to the IRS via the IRS non-filer portal. You’ll need to provide your name, mailing address, birth date, social security number for you and your dependents (or your other taxpayer ID), and your bank account and routing info as part of the process.
If you had a loss of income or a new dependent that could make you eligible, you can also update this type of information via the non-filer portal. Doing so may make you eligible for a larger monthly payment.
To check your payment status, use the Child Tax Credit Update Portal. You’ll need your IRS username or ID.me account information, but if you don’t have one yet, you can create one on the login page.
View more information: https://www.fool.com/the-ascent/personal-finance/articles/stimulus-update-food-insecurity-other-financial-hardships-decline-after-child-tax-credit-payments/