Rutgers Study Reveals How N.J. Parents Used the Child Tax Credit
Wednesday, Mar 16, 2022

PISCATAWAY, N.J. (March 16, 2022) – Many Americans save their tax refund or use it to chip away at debt, but advance payments of the Child Tax Credit in late 2021 filled a much more basic and urgent need in New Jersey. A new report by the Rutgers Center for Women and Work, in partnership with the New Jersey State Policy Lab, finds most low-income parents spent the money on food, clothing, rent, and utilities. 

image of family eating lunchHowever, the report also finds that nearly half of eligible parents in the Garden State did not receive advance payments. While there are several possible reasons, the finding raises concerns that tens of thousands of low-income families are leaving money on the table as we near the April 18 filing deadline.

“The Child Tax Credit lifts families out of poverty,” said Debra Lancaster, executive director of the Rutgers Center for Women and Work and co-author of the report. “What this research shows is that low-income households in New Jersey are using the money for basic needs like groceries and paying the bills. That’s significant because it means the policy is doing what it’s supposed to do. But it’s also worrisome that so many low-income parents did not receive any payments last year.”

Under the last federal stimulus package, the Child Tax Credit expanded to give eligible parents up to $3,600 per child and enabled them to receive half the total in monthly payments from July through December. The Census Bureau surveyed parents to find out how they used the money, and Rutgers researchers analyzed the data to drill down on New Jersey spending. They found:

  • Food (34%), clothing (17%), and savings (15%) were the most common uses.
  • Donations/gifts (1%), tutoring (1%), and recreation (3%) were the least common.
  • Low-income households were much more likely to spend the money on basic needs.
  • Higher-income households were more likely to save or invest it.
  • 25% of parents with a child under age 5 spent at least part of the money on childcare.

“The fact that so many parents of young children used the payments on childcare really raises a red flag,” said Sarah Small, postdoctoral researcher in the Rutgers Center for Women and Work and co-author of the report. “Without financial support or vast improvements in the state’s childcare infrastructure, many of these families will continue to struggle.”

Although nearly every parent in New Jersey is eligible for the Child Tax Credit, just 56% received advance payments last year. The number was even lower, 41%, for parents whose household income is less than $25,000. The low numbers could be due to underreporting, parents opting for a lump sum in 2022 over monthly payments last year, or limited awareness of the credit among low-income New Jerseyans. Fortunately, there is still time to file a return and claim the full Child Tax Credit.

“The Child Tax Credit helped lift countless New Jersey families and their children out of poverty, but this program only works when families receive their payments,” said Dena Mottola Jaborska, executive director of New Jersey Citizen Action. “We urge all eligible New Jersey residents to make use of the free tax preparation services available to them to ensure they receive all the tax credits they are eligible for. We also call on lawmakers to renew the federal Child Tax Credit and establish a similar law at the state level. Putting cash into the hands of working families has been one of the best weapons against economic insecurity.”

Several organizations, including New Jersey Citizen Action and the United Way of Northern New Jersey, are offering free tax preparation for low-income and moderate-income filers. Go to the IRS website and enter your zip code to see a list of free tax prep sites in your area.

Research Note

This work was produced in partnership with the New Jersey State Policy Lab, which is funded by the New Jersey State Office of the Secretary of Higher Education.

Press Contact

Steve Flamisch
Rutgers School of Management and Labor Relations
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About Us

The Rutgers School of Management and Labor Relations (SMLR) is the world’s leading source of expertise on managing and representing workers, designing effective organizations, and building strong employment relationships. 

SMLR’s Center for Women and Work (CWW) engages in research, education, and programming that promotes economic and social equity for women workers, their families and communities.

The New Jersey State Policy Lab is a nonpartisan, independent research center operated by the Bloustein School of Planning and Public Policy and the School of Public Affairs and Administration at Rutgers University.