Child tax credit: it is difficult to get payments for lower income parents


But that depended in part on improved credit given to America’s most needy families – those with incomes so low they don’t have to file taxes.

With the potentially final installment due on Wednesday, the impact of these efforts remains uncertain. Some parents were connected to free tax preparation services to file their returns, while others were guided through the portals, according to several nonprofit groups interviewed.

Many low-income families, however, remained reluctant to take the necessary steps to receive the credit, even if that meant giving up up to $ 3,600 for each of their children for 2021, community organizers said. Parents have raised concerns about losing public benefits, disclosing their immigration status, or being required to repay taxes, student loans or child support they may owe. , among other reasons.

“People who have avoided paying taxes for a reason still don’t want to do it,” said Jessica Brown, director of strategic initiatives at Community Development Advocates of Detroit. They fear it will ignite a whole other ‘you owe me, you owe me, you owe me’ from the government.

It is not known exactly how many children are in families who have had to act to receive the monthly payments – estimates range from 3 to 5 million children. The vast majority of eligible parents automatically receive payments, which were equal to half of their total credit.

The IRS said it was still determining how many parents used its online portal.

Another group, Code for America, worked with the White House and the Treasury Department to launch a registration tool for non-filers in September. It was easier to use on mobile devices and was available in Spanish, unlike the IRS portal.

More than 115,000 simplified returns have been processed successfully, providing filers with $ 438 million in refunds, said David Newville, senior director of the nonprofit group’s tax benefits program. But most people were clamoring for the coronavirus stimulus checks – only more than a fifth received the monthly child tax credit payments.

Families who missed monthly payments can still receive the full enhanced credit if they file a 2021 tax return next year. The IRS and the Code for America plan to renew their efforts during the next filing season.

Additionally, if the Democrats’ $ 1.9 trillion spending plan passes the Senate, the improved monthly payments could be renewed for 2022, with additional funding for awareness as well. This could further incent non-filing parents to file tax returns, and the IRS and community groups another opportunity to convince them.

Credit subsidy

The $ 1.9 trillion US bailout, which Biden enacted in March, made several significant changes to the existing child tax credit for 2021. It increased the size of the credit, giving eligible families up to to $ 3,600 for each child under age 6 and up to $ 3,000 for each age 6 to 17.

Lawmakers decided to send half the credit to parents in monthly installments – up to $ 300 for each young child and up to $ 250 for each older child – from July through December to help them pay the bills and meet the needs of their children. Families will receive the other half when they file their 2021 tax returns next year.

Also key to the fight against poverty: the relief program made the tax credit fully refundable so that more low-income parents can take advantage of it. It had only been partially repayable – leaving more than 26 million children unable to get full credit until this year because their families’ incomes were too low, according to the Treasury Department.

Most parents had nothing to do to get the funds since the IRS already had their 2020 or 2019 returns showing they were claiming the regular child tax credit, which was $ 2,000 for each child up to. ‘at 17 until this year. About 36 million households, comprising 61 million children, received the monthly payments.

Awareness efforts

The IRS worked with over 11,000 nonprofit organizations, churches and community groups over the summer and fall to host events and publicize enhanced credit, with the goal of reaching families not reporting.

It has also coordinated with hundreds of federal, state government and municipal agencies to share information with their constituents and clients.

Local groups have tried various methods of contacting parents. But finding those who do not file tax has not been easy, as there are relatively few of them. Two nonprofit executives interviewed compared it to finding a needle in a haystack.

The Michigan Department of Health has sent credit text messages to its customers receiving food stamps, leading to a surge in appointments with tax preparers, Brown said.

Code for America hosted a webinar for parents in Chicago public schools, which hosted activities in zip codes where non-filing parents likely live and sent flyers home in children’s backpacks.

Springboard to Opportunities teams knocked on more than 400 doors in the 10 affordable housing communities in Mississippi, Alabama and Maryland with which the nonprofit group works. They informed parents of the improved credit and used tablets to guide those who needed help through the IRS portal, said Aisha Nyandoro, CEO of the organization.

In southwest Detroit, Community Congress outreach officers set up tables and handed out flyers at various events, including Music in the Park concerts, Police Athletic League football games, and National Night Out, said Amanda Holiday, director of early childhood programs for the nonprofit group. He also participated in Halloween Trunk or Treat activities to educate parents while their kids were picking up candy in cars.

When families expressed interest in the child tax credit, workers got their names and numbers and asked tax preparers to call them back, Holiday said. By filing returns, instead of using the portals, parents could also find out if they are eligible for other tax credits or government assistance.

Talking to people face to face was generally much more effective, said Drew Astolfi, director of field support at Community Change, which tapped into its network of local community groups to educate parents and allay their concerns about submitting their information. to the IRS.

“It took a bit of fussing and cajoling. But for a lot of people, it wasn’t enough to get them to drop out,” Astolfi said. “For a lot of these people, you had to tell them that we were going to have a party where we were talking to an accountant.”

Outreach efforts in the greater Detroit area have helped attract many more people who had not recently filed income tax returns to the Accounting Aid Society, which provides free tax preparation to low-income residents. The nonprofit group has helped nearly 1,600 non-tax filers this year, up from around 500 last year, said Matt Hetherwick, director of personal income tax programs.

Many community groups plan to continue pushing parents to file their 2021 tax returns next year so they can claim either the second half of the tax credit or the full amount if they haven’t received. monthly payments.

In Detroit, the company’s preparers told non-filers they had to return next year to submit their 2021 return in order to receive the rest of the funds. He also plans to follow up with parents to remind them, Hetherwick said.

Additional tax preparation assistance will be available during the regular reporting season in 2022. The Nevada Free Taxes Coalition, for example, will likely have nearly three dozen locations in southern Nevada that it will encourage. parents to visit. He only had two locations in Las Vegas this summer and fall.

“At the end of the day, if you haven’t already received the child tax credit, it’s not too late,” said Pat Smith, program director for the coalition, which has helped around 100 to 150 people to file their taxes and apply for the credit this year.

Reduce poverty and hardship

However, many lower-income parents ended up filing returns or using the portals, the improved credit certainly helped reduce child poverty this year, said Elaine Maag, senior research associate at Urban-Brookings Tax. Policy Center. That’s because millions of other families who had partial credit became eligible for the full amount this year, thanks to its full refund.

“It does most of the work to lift people out of poverty, more than the larger credit amount,” Maag said of the repayable provision.

About half of adults reported spending the monthly payments on food, according to an Urban Institute analysis of Census Bureau data from mid-July to mid-September. Money was also commonly used for clothing, utilities, textbooks, and supplies.

Those who received the monthly payments said it made a big difference.

A mother told Nyandoro that she could take her boys to the store to choose their own backpacks, instead of receiving donations.

“We know that these checks have had a significant impact,” Nyandoro said. “There is still a pandemic. Many people still find it difficult to return to work. They have trouble finding child care. Inflation and the cost of everything are increasing.

“It allowed people to breathe a bit,” she said.


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