Without a January child tax credit payment, Jen Cousins will have to wait a few extra months to replace the brakes on her minivan, the only car her family of six owns.
Cousins, 44, a stay-at-home mom in Orlando, Florida, has been receiving the full credit for each of her four children ages six, eight, twelve and thirteen for the past six months. She's put most of the extra money toward medical expenses – the entire family wears glasses, one child needs special prescription eye drops and speech therapy and soon, her oldest kids will need braces.
Her husband, Matt, 43, works as a software architect and has insurance through work, but it only covers him, so the family pays almost $1,000 each month to insure Jen and the kids, she said. Plus, additional out-of-pocket expenses always come up.
More from Invest in You:
Companies raise perks to repay employees' student loans
Here's a financial road map for the rest of the year
Biden 'not sure' child tax credit, free community college will stay in Build Back Better
"When you have four kids, weird things come up all the time," she said. "Somebody breaks something, and you've got a $400 ER visit you've got to pay."
Without the credit, her family budget will tighten significantly, she said. Some 35 million families with 65 million children face the new year without a generous tax cut.
"We can already feel the pinch," she said of missing just one monthly check. "It's figuring out where are we going to trim stuff, because it has been a really good support system for us to have for the last six months."
The enhanced child tax credit
In March 2020, the passage of the American Rescue Plan enhanced the existing child tax credit, increasing the benefit to $3,000 from $2,000 and adding $600 for children under the age of 6 for the 2021 tax year.
The first half of the credit was delivered to families via monthly checks that started in July and went through December. The second half will come when people file their 2021 tax returns this year.
If the benefit had been extended, as Democrats proposed in the Biden Administration's Build Back Better plan, another check would've likely been sent in the second week of January.
"After just six months of payments, the evidence is clear. The expanded and improved monthly Child Tax Credit, a policy I have been working on since 2003, works," said Rep. Rosa DeLauro, D-Ct. "It was a lifeline for the middle class — the biggest middle class tax cut we have seen in generations — and lifted 50 percent of children out of poverty."
But the legislation has been blocked in the Senate by moderate Democrat Joe Manchin, D-W.Va. One of Manchin's issues is the child tax credit, which was made fully refundable in 2020, meaning that a family can claim it even if they have no earned income. Manchin opposes this and has proposed adding a work requirement going forward.
To advance the rest of the $1.75 trillion proposal, Biden may split parts of the bill and attempt to pass it in pieces. He's not sure the child tax credit will stay in the legislation, he told reporters Wednesday.
"I think we can break the package up, get as much as we can now and come back and fight for the rest of it," he said.
What happens without the credit
Without the credit, advocates worry that the benefits seen from the monthly checks will be reversed. Some 10 million children will likely fall back below the poverty line, according to the Center on Budget and Policy Priorities, a progressive think tank.
There's also worry that many will go hungry because early data from the Census Bureau showed that the child tax credit led to a quick drop in food insecurity, said Elaine Maag, a principal research associate at the Urban-Brookings Tax Policy Center.
In addition, losing parts of the enhanced credit, such as full refundability, leaves out millions of children, including those in the poorest households. It also disproportionately bars Black and Latino children from receiving the credit.
To be sure, the entire child tax credit isn't going away. Some families will still be able to claim the previous smaller credit next year. It's also important that all families with eligible kids file taxes this year to claim the second half of the credit, or the full credit if they didn't get advance payments.
And, data showed that some families were able to use the credit to save or pay down debt, which hopefully means they're in better financial standing now, Maag said.
Democrats are still fighting to pass Build Back Better, but it's unclear if the enhanced child tax credit will be included. In early January, Manchin – whose vote Democrats need to pass the legislation – said he's had no talks about restarting negotiations on the bill.
"There is a path forward. I am optimistic that we can get this tax cut over the finish line," said DeLauro. "We cannot stop now. We cannot lose hope. We cannot give up the fight."
There may also be some potential for the credit to be enhanced through other legislation, potentially even in a bipartisan fashion. Sen. Mitt Romney, R-Utah, last year proposed a bill that would replace the existing child tax credit but continue monthly checks to families for each eligible kid.
Sen. Josh Hawley, R-Mo., proposed a parent tax credit last year, which would give a fully refundable tax cut to working parents and keep monthly advance payments.
So far though, there has been little movement on any bipartisan legislation. For now, families can't depend on getting monthly checks again anytime soon.
Alana Truss, 39, who works as an analyst at a health care system in Las Vegas, is planning on the credit being gone for good while hoping it comes back.
"I don't want to plan on it and have it not happen," she said. She and her husband, who works for the Social Security Administration, also have a 19-year-old daughter in college who they support. "I'm just going to have to be really cautious about spending."
Truss received the full credit for her 14-year-old son and used it to cover the rising costs of groceries and gas. Without the credit, her budget will be much tighter, she said, especially because the family's rent was recently increased.
"Not having that extra cushion has been a little unnerving," Truss said.
SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox. For the Spanish version Dinero 101, click here.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.