New child tax benefit coming Thursday a relief for Minnesota, U.S. families

Raquel Barrientos and her family have been scraping by during the pandemic but, with the government's expanded tax break for children arriving this week, some choices may be a little easier.

Like strawberries or grapes for her 4-year-old.

Right now, that's a splurge for her and her husband, who closely watch every nickel and dime in their budget. With the expanded tax break, there will also be enough for haircuts, shoes and school supplies this fall when their young son starts preschool and 9-year-old son returns to in-person school.

"I'm not going to have to freak out, 'Oh, are we going to have enough for the grocery bill this week? Or the gas bill?'" Barrientos said. "I can breathe a little easier and don't have to be on such edge about watching everything."

Congress and the Biden administration earlier this year boosted the amount of the child tax credit, and they decided to start giving families half of the credit in advance in the form of monthly payments. Previously, parents received it all as a refund when they filed taxes each spring.

The changes are expected to have a big impact this year, lifting tens of thousands of children in Minnesota, and millions more around the U.S., out of poverty.

"It's a really big help to families in a time when they are under a lot of pressures," said Aaron Sojourner, a labor economist at the University of Minnesota. "It will reduce child poverty. It will improve child well-being. And it will reduce parental mental health struggles."

Research shows that can lead to better outcomes later in life. Children are more productive and successful if they're able to get higher-quality experiences growing up and have parents who are less stressed and less overstretched, he said.

More than 39 million households — covering almost 90% of children in the U.S. — will start receiving the payments Thursday, either directly to bank accounts or as checks in the mail.

The size of the credit increased from from $2,000 to $3,000 for children between the ages of 6 and 17, and to $3,600 for children under the age of 6. Monthly payments of $250 to $300 per child, which amount to half of the credit, will go out through the end of the year.

In Minnesota, more than 1.1 million children and their families are eligible for the expanded benefits, according to the Center on Budget and Policy Priorities. That includes 320,000 children who previously received only a portion of it or none at all because their family's income was too low to file taxes.

Families that did not file taxes in 2019 or 2020 have to sign up to get the funds if they haven't already registered with the federal government to receive stimulus payments.

Some child and family advocates say that hurdle may mean that some who could desperately use the money might not get it. So a wide swath of nonprofits and other agencies around Minnesota have been trying to get the word out about it.

"We're continuing to push really hard," said Debra Fitzpatrick, policy and legislative affairs director for the Minnesota branch of the Children's Defense Fund.

They're also trying to get the word out that families can choose to opt out of the monthly payments and receive a full lump sum when they file their taxes.

But most families, especially lower-income ones who are struggling the most, are expected to prefer to receive the default advance monthly payments.

"Families' expenses happen every day, every week, every month," Sojourner said. "And income can be very jumpy for a lot of families, especially these days."

That's the case in the Barrientos household. Raquel's husband works in construction, mainly laying floors in new buildings, and his work has swung widely since the pandemic began in spring 2020.

"It's a roller coaster," she said. "They keep saying, 'Oh, you know, it should go back to normal soon.' But I haven't seen it get to back to normal yet."

Minnesota ranked third in the nation for child economic well-being in the most recent Kids Count report from the Annie E. Casey Foundation. But more than 143,000 children in the state live in poverty, a number that has likely increased since the start of the pandemic.

Black children and children in rural areas in Minnesota, whose families tend to have lower incomes, will likely feel a bigger impact from the child tax credit changes, Fitzpatrick said. She added that lower-income families were most affected by job loss and were more likely to work in front-line jobs during the pandemic.

Even before the pandemic, many low-income families experienced volatility in work schedules and hours. The expanded child tax credit is a way to help smooth out those big swings of income from month to month and make sure families can meet their basic needs.

"This has been put out there as a solution to help families recover from the pandemic, but we knew there were huge issues before the pandemic," Fitzpatrick said. "And those things have not gone away. They're going to continue to be an issue as we come out of the pandemic."

Critics have suggested that some families might use the extra funds to buy a vehicle. But Fitzpatrick doesn't see a problem with that.

"Low-income families often don't have a reliable car, which has huge cascading effects on their ability to work or their ability to get their kids places," she said. "You can't function in most of rural Minnesota without a car."

After a year and a half of cutting back on every expense she could, visiting food shelves and going to organizations for donated clothing, Cynthia Haynes of New Hope has a long list of possible uses for the tax credit: food, cleaning supplies, toiletries, clothing, school supplies, utility bills.

And if there's enough, she'd love to use some of the funds to help her move her three children to a larger and safer apartment. The pandemic, she added, has been stressful but also a wake-up call to find a way out of low-wage jobs.

"I'm tired of every day waking up knowing I'm just getting by," she said. "It affects me mentally. It affects my family emotionally. No matter how much I work, it still feels like I don't have enough."

After leaving her job at a day care when the pandemic hit so she could be home while her children were remote schooling, she took a new job in April through the nonprofit All Square. She is part of its leadership and entrepreneurship fellowship program, which she hopes will help lead to a higher-paying, more sustainable job when she's done.

"It's not really about getting back on my feet," she said. "I was never really on my feet."

While she knows the child tax credit won't solve all her problems, she said she hopes it can provide a little more stability for her family until she does find her footing.