Thanks to an expansion of the Child Tax Credit enacted by President Biden and Democrats in Congress, millions of families with kids will begin receiving monthly payments on July 15th that are estimated to cut child poverty by half. This landmark program from the Biden administration will deliver automatic monthly payments of up to $300 for each child under six and $250 for each child under 18 to more than 36 million working families. However, because the credit is delivered through the Internal Revenue Service and based on 2020 and 2021 tax filings, millions of eligible households could be left out of receiving payments.
To address this issue, the IRS has begun sending letters to potentially eligible households to make them aware of the coming payments and has launched a non-filer sign-up tool for those families that don’t traditionally file taxes but have eligible children to send their information directly to the IRS. This subset of households usually have very little income and stand to benefit the most from the credit so getting them signed up is critical to the CTC’s purpose of reducing poverty.
Earlier this week, the IRS also announced partnerships with a national network of local non-profits and community organizations to help eligible taxpayers get registered and encouraged families without bank accounts to set up accounts online to receive the monthly payments faster via direct deposit.
There are remaining challenges to ensure that all eligible children reap the benefits of the CTC. For example, children in households with a student loan borrower in default on federal student loans could be penalized if this critical benefit is seized come next tax season. As the pandemic moratoriums are lifted as the economy bounces back, we hope that Congress takes action to ensure that the CTC and Earned Income Tax Credit, two well-targeted anti-poverty measures, are exempted from garnishment.
As CTC Awareness Week comes to a close, we hope that this is just the beginning of a concerted, targeted effort to spread the word and reach every eligible household to make them aware about this credit and get them signed up. Because the CTC was only passed for 2021, PPI also encourages lawmakers to pass a permanent and fiscally responsible expansion of the CTC that makes the credit fully refundable for low-income families and continues monthly payments beyond 2021.