With under two months until online filing through GetCTC.org closes, recently-released data and reports paint a clear picture: the expanded Child Tax Credit (CTC) reduced hardship among families with children, and outreach remains critically important to ensure that all eligible families get this money. You likely heard about the Census Bureau’s recent release of Current Population Survey and Supplemental Poverty Measure findings for 2021 and American Community Survey (ACS) 1-Year estimates for 2021. While CPS and ACS data only rely on the Official Poverty Measure, the Supplemental Poverty Measure (SPM) provides data which take into account government benefits such as the CTC. For this reason, you will note that the official poverty estimates are higher than those captured by the SPM. The SPM tells us what a significant difference the expanded CTC made in 2021, while ACS data demonstrate what would have happened without the expanded credit. The SPM data demonstrate that the child poverty rate fell 46% in 2021 to 5.2%, which is the lowest recorded SPM rate among children. The 2021 CTC alone was responsible for 5.3 million people moving out of poverty last year. Please check back soon at our “Child Tax Credit News” blog for a deeper dive into what we can learn about the impact of the 2021 CTC from the Census poverty data.
Beyond the newly-released Census poverty data, a number of recent reports highlight both the CTC’s tremendous role in supporting families and the need for continued tax credit outreach. With just weeks before GetCTC.org closes and the subsequent approach of the tax filing season, these reports, taken along with the Census poverty data, highlight why we must continue to spread the word about the CTC.
The Impact of the Child Tax Credit
In August, Children’s HealthWatch, Revolutionary Healing, and the Kairos Center for Religions, Rights, and Social Justice released a report, “ ʻI didn’t have to worryʼ – How the Child Tax Credit Helped Families Catch Up on Rent and Improved Health.” The study relied on both quantitative and qualitative methods to demonstrate the positive impact the 2021 expanded CTC had on families and children. It found that families that received the 2021 advance CTC payments were 2.66 times more likely to catch up on rent payments after they had fallen behind earlier in the Covid pandemic. The study additionally found that the advance payments increased food security, improved parental mental health and helped families pay for child care.
In another August report, “The Impact of the Enhanced Child Tax Credit on Lower-Income Households,” SaverLife, Commonwealth and Neighborhood Trust Financial Partners also highlighted the expanded CTC’s significant impact on families. They noted that this year’s larger tax refunds, including the expanded CTC, supported family financial stability, particularly in families with incomes below $20,000. In SaverLife’s Member Panel survey from May 2022, 65% of respondents with incomes under $20,000 reported that their tax refunds would make them less likely to miss utility payments. Sixty-five percent reported that their refunds would enable them to buy additional food for their families and 66% reported that this money would allow them to spend more money on essential items for their children. In an indication of just how critical the expanded CTC has been, 92% of surveyed CTC recipients predicted that a failure to extend the CTC expansion would hurt their families and anticipated increased difficulty in paying for housing, utilities, food, and other day-to-day necessities.
The findings on the expanded CTC’s positive impacts do not stop there. This month, The Center for Law and Social Policy (CLASP), University of California, Berkeley, the Center for the Study of Social Policy, the Children’s Defense Fund, ideas42, the National Women’s Law Center, Prosperity Now, UnidosUS, and the Urban-Brookings Tax Policy Center released key findings from July 2022 surveys. Their research revealed that 60% of surveyed parents in the continental U.S. who received the 2021 monthly CTC payments reported that it had become harder for their families to pay expenses since the monthly payments ceased in December 2021. Sixty-six percent of these parents reported difficulty paying for food and 65% reported difficulty paying the bills. Among Puerto Rican survey respondents, individuals who claimed the CTC reported plans to spend their tax refunds on bills and basic necessities, including food, clothes and school costs, among other daily expenses.
The Critical Need for Continued Child Tax Credit Outreach
The three above-mentioned reports also point to the importance of CTC outreach: both how it has already been effective and the need to continue spreading the word among families. In their report from last month, Children’s HealthWatch and partners note that while the CTC payments helped families, not all families could access the credit. They found inequities in receipt of the 2021 CTC advance payments by race, ethnicity, education level and tax filing status, among other factors. Indeed, the report found that families with immigrant parents were 42% less likely to receive the advance payments, underscoring the importance of continued CTC outreach in immigrant communities.
In their report, “The Impact of the Enhanced Child Tax Credit on Lower-Income Households,” SaverLife and partners focused on the second half of the CTC (claimed through filing 2021 tax returns this year). They identified some of families’ misconceptions and fears that may prevent them from claiming the CTC. Forty-one percent of surveyed CTC recipients reported that this tax season was more confusing than in prior years and 40% reported they had filed later than they typically do. Sixty percent of those who reported filing later than usual referenced more confusion this tax season, including insufficient communication about the CTC, while 51% reported they filed later because of concerns about owing money back. Ultimately, among those surveyed who anticipated owing money to the IRS, 44% received refunds instead. The report found that recipients generally received bigger tax refunds than expected. This research points to the need for continued CTC outreach to address common concerns we have encountered among potential filers, including anxiety about owing money to the IRS and general uncertainty about eligibility. You can find frequently asked questions and responses from the IRS here.
Finally, the key survey findings from CLASP and partners point to both good news about the tax credit outreach that has already occurred, and the need for continued outreach in the coming months. The survey revealed that between October 2021 and July 2022, the CTC take-up rate increased from 64% to 75% among Hispanic parents in the continental U.S. In the context of the above-referenced inequities in claiming the CTC among families with immigrant parents, this increase in take-up among Hispanic parents points to community partners’ critical outreach efforts. In another piece of good news, survey results revealed that 88% of Puerto Rican respondents had heard about the CTC before participating in the survey, again pointing to effective outreach and awareness efforts. While these figures reflect the importance of outreach that has occurred during the past year, there remain gaps. The study found that white parents claimed the CTC at higher rates than Black or Hispanic parents, even with the noted progress among Hispanic filers. In Puerto Rico, those with higher levels of education claimed the CTC at higher rates, as did married parents. Respondents who had not claimed the CTC (and did not plan to do so) reported thinking they were ineligible for the credit or not knowing about it. Again, this points to the need for ongoing outreach.
We hope that you will join us in continuing to spread the word about the CTC! If you are new to CTC outreach, please check out our website for resources and recent webinar recordings. For questions, please contact Julia Beebe or Aline S. da Fonseca.