How should you spend child tax credit money? Some parents hope to afford childcare
The enhanced child tax credits that are arriving in bank accounts of parents across the country this week will allow some parents to get back to work now that they can afford childcare that has been out of reach for much of the pandemic.
Beth Ferreira, who works part time as a podcast host for a Fort Worth publication focused on motherhood, was skeptical when the enhanced child tax credits were announced.
“Now we are here, looking back on the last year, it really is a need for us,” Ferreira told the Fort Worth Star-Telegram. “We are just glad that they are doing this and that they see that there’s a need across socioeconomic boundaries, that this is a necessary thing right now.”
While Ferreira has kept a budget over the course of COVID, the rising cost of groceries paired with having her three kids at home full time due to the pandemic almost doubled her grocery bill.
“Our daily lives have changed and are more expensive, so I’ve been looking for extra work on the side,” Ferreira said. “But it is hard to do because I always have at least one kid that is home full time.”
With the tax credit, which will provide $300 a month for each child 5 and younger, Ferreira plans on sending her youngest daughter, Eisley, to preschool for two days a week. The monthly payments will continue for the next year and also include $250 for each child between ages 6 and 17.
“It will cover that extra expense, which will then allow me some time to be able to maybe find some extra work that I can do during the week,” she said. “So that’s going to be the biggest change financially for us.”
Other parents are also discussing using the funds for childcare.
Jeanette Hopkins, a volunteer income tax assistance coordinator for the City of Fort Worth, has helped numerous families with questions in the process of filing taxes and receiving their tax credit even if they didn’t file taxes last year.
“I had a young mother the other day say she was going to use her money for daycare, to go back to work,” Hopkins said. “She didn’t really feel comfortable going back because she had a child, but now she is going to use the money to help with the daycare costs.”
A hope for childcare centers
While parents with younger children are making plans for the funds, childcare centers are waiting to see whether the extra money will mobilize people back to work.
“The crystal ball is fuzzy right now,” said Kara Waddell, the CEO of Child Care Associates in Fort Worth. “It is the million-dollar question in childcare right now, which is what’s going to be happening?”
There is some concern, Waddell said, that between Supplemental Nutrition Assistance Program checks and the extra funds from the child tax credit, families will delay getting back to work.
“We obviously have a real challenge with positions, especially in the service sector, childcare workers, teaching assistants, restaurant workers,” she said. “So we want to make sure families get the help they need, but we also really need folks to get back to work. Childcare is is an important piece of that puzzle.”
Even as parents do start back looking for childcare options, the circumstances surrounding the pandemic have left the childcare workforce decimated.
Not all families file taxes, including those who rely on Social Security, disability and other forms of assistance. For non-filers, and others unfamiliar with the process, the United Way of Tarrant County Volunteer Income Tax Assistance Program has been assisting families to ensure eligibility.
The free service has prepared 6,323 tax returns with Child Tax Credit returns totaling $4,193,734.
Other needs
While childcare is an essential cost for many families, COVID-19 compounded other expenses as well, with extra costs coinciding with widespread unemployment.
Heather Buen was able to work from home at the start of the pandemic, but her husband lost his job and expenses started to pile up.
With six kids learning from home in elementary, middle and high school, Buen needed to spend money on headphones and higher-capacity internet, even as the school district provided laptops for all students.
Next school year, with a full in-person return to classrooms, parents will have to consider back-to-school costs including new clothes, technology and other basics.
According to a recent survey by Deloitte, the average family in Dallas-Fort Worth will spend $1,087 on back-to-school shopping — 78% higher than the national average.
“They’ve all grown,” Buen said of her six children. “We want to make sure that they’re dressed properly, especially for the weather to go back to school.”
With unemployment and a single income, the family had to defer mortgage and other payments, accruing thousands of dollars of debt and dipping into retirement savings.
With extra dollars coming in from the child tax credit in the coming months, Buen said, she and her husband will start to recover financial losses from the last year-and-a-half.
“A lot of what we’re going to be using it for is really to catch up on some of the past payments,” Buen said.
Those payments include student loans between the two parents, and returning funds taken from retirement at the height of the pandemic.
Child Care Associates operates the Head Start program in Fort Worth, and has started working directly with families to help plan for how to strategically utilize the funds from the tax credit.
“What’s your plan? What are those resources? Can you pay down debt? Do you need to use it for immediate needs? Do you need it for an emergency savings fund?” are some key questions Waddell said she has asked families. ”They’re important, important questions. For a low-income family with children, it’s a great opportunity to get ahead, or at least to keep your head above water.”
This story was originally published July 16, 2021 at 5:30 AM with the headline "How should you spend child tax credit money? Some parents hope to afford childcare."
