Child Tax Credit Problem: Some Eligible Families Don’t Know They’re Supposed to Get It

Child Tax Credit Problem: Some Eligible Families Don’t Know They’re Supposed to Get It

Obstacles mount in an attempt to reach the poorest families. 

The first checks of the advance Child Tax Credit payment are scheduled to be sent out today. For most families, they will take several weeks to arrive, although households that signed up for direct deposit will receive theirs faster.

The current payment – $250 for each child for children six or older, and $300 for children younger than six – has been heralded as a lifeline for struggling families during the COVID-19 pandemic. President Biden, who signed the March 2021 American Rescue Plan Act that provided for the advance checks, highlighted the increased payments as a pandemic relief measure. The president correctly pointed out that working- and middle-class families had faced challenges during the pandemic that other families had not, and that childcare represented a major cost that the increased tax credit could help to alleviate.

Along the same line, the credits have been made “refundable”; in other words, they can still be claimed even if a family would pay nothing in income taxes, making them more akin to cash payments rather than a tax credit. The advantage of a fully refundable credit is that poorer families can take advantage of the credit, unlike traditional tax credits, which lessen a family’s tax burden but are useless for the families that do not make enough income to pay taxes.

However, as The Atlantic observed, there is a major problem with the Child Tax Credit’s implementation: it is being sent out by the IRS, based on families’ tax returns from previous years. While this helps to weed out families whose income exceeds the cap – set at $75,000 per year for single parents and $150,000 for couples – it also ignores families that did not file tax returns in 2019 and 2020, and therefore do not exist in the IRS’s eyes.

The problem is that there is no good way to reach these families. The IRS has set up a portal on its website to allow the families to register for the payments, but it has had great difficulty in making many aware of the opportunity.

Even those who are registered for the payments often do not know that they are coming; a Data for Progress survey claimed that half of the credit’s intended recipients had no idea that it was coming. Various advocacy groups have held door-to-door campaigns across the country, but it is unclear if this has had a significant effect on enrollment. Another concern is that the IRS portal is only available online, and the poorest families may have difficulty accessing the Internet.

This matters because if a check is lost in the mail or never arrives, families will be none the wiser – and they will suffer economically as a result.

Trevor Filseth is a current and foreign affairs writer for The National Interest.

Image: Flickr