A recent report by the University of Michigan and Propel have found discrepancies in the numbers of families receiving their Child Tax Credit (CTC). The survey shows Hispanic and low-income families are substantially less likely to receive the benefit, despite being eligible.
Congress passed a one-year expansion of the Child Tax Credit in March, providing low-income and middle-income families with $3,600 per child under 6 and $3,000 per child ages 6-17. Half of the tax credit has been distributed as monthly payments, and the other half will be part of families' 2021 tax refunds.
The expanded CTC is already estimated to have reduced child poverty by about 30%, which families receive by filing their 2019 or 2020 taxes or by completing a nonfiler form with the IRS.
In a November survey of about 3,350 parents with low incomes, nearly one-third of respondents reported not receiving an October CTC payment.
“To be frank I think we’re a little bit baffled on what’s driving these differences…I will say they’re very persistent. Month to month, we’ve seen barriers,” Katherine Mitchelmore, University of Michigan associate professors of public policy, said.
Among the 32% of families who did not receive the October CTC payment, it's reported that 4% had filed for the credit and were awaiting payment and 7% reported not receiving the credit for "valid" reasons, such as opting to get the lump sum payment or another parent receiving the credit. However, the remaining 21% did not receive the October CTC payment for "other reasons" to which Mitchelmore says are still largely unknown.
The survey showed unemployed parents and families with less than $500 in monthly earnings were substantially less likely to receive the October CTC payment. Mitchelmore says this is troubling, as payments are missing the most vulnerable families.
“Three quarters of our sample is spending the credit on paying bills so it seems to be a crucial part of keeping people afloat during this difficult time...Our partners at Propel have been speaking folks in the White House and relaying that to the IRS to try to understand what’s going on,” she said.
While Michelmore says some items could be a result of tax filing behavior of families, she adds that wasn’t the case when it came to Hispanic parents. When surveyed in Spanish, Hispanic families were far less likely to receive their tax credits, despite filing taxes at comparable rates to their counterparts.
As some still await their payments, Michelmore says its vital to learn more about these discrepancies.
“We need to understand more about the root cause of why some families aren’t receiving the benefit in order to see ways that we can better serve those families," she said.
