Some parents started businesses with the help of the child tax credit last year.

Russell Toll viewed the arrival of child tax credit checks in July of the previous year as an investment in his family.

The nonprofit Compassion Neuroscience was launched more quickly with the help of credit, making transcranial magnetic stimulation therapy more accessible to those in need in the Dallas-area.

Toll, a 40-year-old assistant professor of psychiatry at the University of Texas Southwestern Medical Center at Dallas and a veteran who served in Iraq, stated that it accelerated the process dramatically.

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When Heidi, 37, was laid off from her nursing job at Disneyland and took on substitute jobs, the family used part of the credit to enroll their youngest child in preschool. Afterward, Toll was able to hire a lawyer to establish a nonprofit.

Toll stated that he can drive a tank for you, but he did not attend business school.

The nonprofit aims to provide free treatment to Gold Star families and will start seeing patients in the spring.

Toll expressed excitement about addressing the dire need and making a positive impact.

How the credit helped

Millions of American households with eligible children received enhanced child tax credit payments of $250 per month for children age 6 to 17 and $300 for children under 6 for the last six months of 2021.

A study by the Social Policy Institute at Washington University in St. Louis found that the benefit supported work and entrepreneurship among parents instead of discouraging it. While families received monthly checks, there were slight increases in parent self-employment and work in the nonprofit sector, the analysis showed.

Nearly 3% of self-employment rate growth occurred in families with incomes below $50,000, with the highest percentage being among Black, Hispanic, and Asian families in this income bracket. This likely contributed to the record number of business creations in 2021.

Parents were able to work more due to the child tax credit payments, which were used for child care, food, and rent. The extra cushion provided by the child tax credit allowed parents to be more flexible with their employment.

Stephen Roll, a research assistant professor at the Social Policy Institute, stated that one of the greatest advantages of the [child tax credit] is that it offers parents financial flexibility, enabling them to make better choices and achieve better outcomes for their families.

The researchers contend that the absence of work requirements in negotiations about increasing credit was a key factor in enabling parents to secure better employment.

According to Leah Hamilton, an associate professor of social work at Appalachian State University in Boone, North Carolina, and a co-author of the study, people had more flexibility to choose their employment situation without feeling pressured to take the first opportunity that came along.

A safety net

The study shows that families with children were able to start their own projects due to the security provided by the monthly delivery of the child tax credit, even though they did not use the money directly for business purposes.

Roll stated that it was comforting to know that their children would still be well-cared for, regardless of their success or failure.

Johnny Walls, a 50-year-old father, used the $250 monthly check he received for his 8-year-old son, Hunter, to cover the lot rent for their mobile home outside Charleston, West Virginia, while he started his freelance website and graphic design business.

"Having a roof over our heads allowed me to start my business and begin working on it," Walls stated.

Walls faced challenges as a single father during the pandemic while trying to balance work and caring for Hunter, particularly when schools were shut down, he stated.

Walls, who previously did IT work outside of the home, said, "I had to find a way to stay home and focus on my business." The financial support he received also helped him reduce stress related to paying for rent, utilities, and food, allowing him to dedicate more time and energy to his business.

"Having a place to live and knowing I would be here was a huge factor in my ability to be creative with my business," Walls stated.

What's next

The enhanced child tax credit expired at the end of 2021, and it is uncertain if it will be renewed. Democrats had proposed a one-year extension of the benefit as part of their Build Back Better plan, but the legislation has been delayed in the Senate.

No bipartisan proposals currently have momentum to revive the credit.

Families are unable to rely on receiving the credit and must face the challenge of rising inflation on their own.

The family budget is tight, so saving for a transcranial magnetic stimulation machine has been put on hold for those who launched businesses in Dallas.

Due to inflation and the loss of the tax benefit, Walls has noticed that his budget is stretched thinner even though he is still working on his business from home.

Saving money is a priority for the family, who are mindful of small expenses like snacks for Hunter and energy consumption, such as turning off lights, regulating the thermostat, and avoiding missing the school bus to conserve gas.

Walls stated that he was eagerly anticipating the time when he wouldn't need to use air conditioning or heating, so that he could use the extra money to buy Hunter new school clothes.

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