Child tax credit helped some parents start businesses last year

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Russell Toll and his wife, Heidi, on his return from duty in Iraq in 2009.

Russell Toll

When child tax credit checks began to be issued in July last year, Russell Toll saw it as an investment in his family.

With help from the credit, the Dallas-area resident was able to accelerate the launch of Compassion Neuroscience, a nonprofit organization that will make transcranial magnetic stimulation therapy more accessible to those in need.

“It just sped up the process dramatically,” said Toll, 40, an assistant professor of psychiatry at the University of Texas Southwestern Medical Center at Dallas and a veteran who served in Iraq.

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It helped keep the family afloat when his wife, Heidi, 37, was laid off from her job as a nurse at Disneyland and took on replacement jobs. The family used part of the loan to send the youngest of their three children to school. Then, Toll was able to hire a lawyer to set up the nonprofit.

“If you need to drive a tank, I’ve got you, but I didn’t go to business school,” Toll said.

The association should see its first patients in the spring. It also aims to one day provide free treatment to Gold Star families – the immediate family of members of the armed forces killed in action.

The children of Russell and Heidi Toll. Ben, left, is now 7, Abby, center, is now 5 and Nick, right, is now 9.

Russell Toll

“There’s such a devastating need, and I’m excited to step out and start making a difference,” Toll said.

How credit has helped

In the last six months of 2021, enhanced Child Tax Credit payments were sent to millions of US households with eligible children. Families on the full benefit received $250 per month for children ages 6 to 17 and $300 for children under 6.

The allowance supported work and entrepreneurship among parents rather than discouraging it, a study data from the Census Bureau of the Social Policy Institute at Washington University in St. Louis was found. As families received the monthly checks, there were small increases in parents’ self-employment and work in the nonprofit sector, the analysis showed.

The self-employment rate rose the most — nearly 3% — in families earning less than $50,000, and was greatest in Black, Hispanic and Asian families earning less than $50,000. This likely contributed to record business creation in 2021.

The researchers found that many parents were able to work more by using Child Tax Credit payments for childcare, as well as other essentials like food and rent. The child tax credit has also given parents an extra cushion to be more flexible in their jobs.

“One of the main advantages of [child tax credit] it’s that it gives parents budgetary leeway that allows them to pursue better outcomes and better options for their families,” said Stephen Roll, assistant research professor at the Social Policy Institute.

Additionally, the researchers say that the lack of job requirements — a sticking point in credit expansion negotiations — helped parents find better jobs.

“Without these work demands, people had the ability to find the employment situation that worked best for them and their families in the long term without feeling pressured to take what came first,” said Leah Hamilton, associate professor of social work at Appalachian. State University in Boone, North Carolina, and co-author of the study.

A safety net

Certainly, the study does not suggest that parents have always used child tax credit money directly to start new businesses. Instead, the fact that the benefit was paid monthly helped give families with children the security they needed to start their own projects.

“It was knowing that their kids would be taken care of even if they failed,” Roll said.

For Johnny Walls, 50, the $250 check he received each month for his 8-year-old son, Hunter, meant the land rent for their mobile home outside Charleston, West Virginia, was covered as he launched his freelance website and graphic design. business.

“We always had a roof over our heads, which allowed me to start this business and get into it,” Walls said.

Johnny Walls and his son, Hunter.

During the pandemic, Walls became a single father and struggled to balance work and caring for Hunter, especially when school was closed, he said.

“I had to find a way to stay home,” said Walls, who previously worked in IT outside the home. The money also helped relieve him of the stress of paying rent, utilities and food each month, which meant he had more time and energy to devote to the business.

“Knowing that I was going to be here and that we had a place to live was huge for me to be creative enough to do my thing,” Walls said.

And after

The enhanced child tax credit expired at the end of 2021, and it’s unclear whether it will continue. Democrats had included a one-year extension of the benefit in their Build Back Better program, but the legislation stalled in the Senate.

There are also bipartisan proposals that would separately revive credit, but none currently have momentum.

This means that for the moment families cannot count on credit and must fight alone against record inflation.

For those who started businesses, it has slowed some progress. In Dallas, Toll was on track to buy his own transcranial magnetic stimulation machine with the help of the credit, which would have helped Compassion Neuroscience see more patients. Now, however, the family budget is tighter, and so saving for equipment has been put on hold.

Things are tighter without the credit for the Walls family as well. Although he was still working on his home business, Walls noticed that his budget was getting thinner due to inflation and the loss of the tax benefit.

Even simple things like snacks for Hunter cost more, and the family is more concerned with turning off the lights, not setting the thermostat too high, and making sure they don’t miss the school bus to save money. petrol.

“I’m looking forward to the time when I don’t have to run the air conditioning or the heating,” Walls said, adding that the extra money could be used to buy new school clothes for Hunter.

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