The Expanded Child Tax Credit is Helping Families, But National Survey Shows Continued Outreach Remains Essential
By Ashley Burnside
The expanded Child Tax Credit (CTC) provided monthly payments to nearly 9 in 10 children in the United States, and it dramatically reduced child poverty in 2021. According to an October survey of over 1,000 parents with children, the monthly CTC payments reached a wide majority of families and improved family wellbeing. Parents reported spending their CTC payments on necessities like food, rent, and clothing. At the same time, some parents surveyed reported that they were not receiving the payments, did not understand why, and struggled to use the tool available for “non-filers” to access the credit. For the CTC to have its full impact, lawmakers, government agencies, and community organizations must do more to ensure that all eligible families are able to access it.
U.S. child poverty rates were high long before the COVID-19 pandemic, disproportionately impacting Black and Latinx children. This phenomenon is due to numerous systemic factors, including the generational racial wealth gap; discriminatory policies in housing, health care, and access to higher education; hiring discrimination in employment; and wage gaps and other factors. The public health crisis magnified existing disparities, hitting Black and Latinx individuals and families especially hard. Child poverty for Black and Latinx children increased at higher rates than that of white and Asian American children.
Many lawmakers and scholars have proposed a child allowance to financially support children and caregivers and reduce child poverty. In 2021, the American Rescue Plan Act of 2021 (ARP) temporarily provided many families with a monthly cash benefit per child through the expanded CTC.
Under the ARP, lawmakers temporarily increased the CTC to $3,600 per child ages 0 through 5, and to $3,000 for children ages 6 through 17. The ARP also made half of the CTC amount available to families as advance monthly payments from July through December 2021, rather than a lump sum paid as a tax refund after filing a tax return. Those payments were a maximum of $300 per month per child ages 0 through 5, and $250 per month for children ages 6 through 17.
The ARP also made the CTC temporarily available to families with little to no income. This provision especially benefitted children of color, who were more likely to be denied the full CTC benefit under prior law due to not having enough income to owe federal income taxes or to receive the full CTC benefit. These CTC expansions apply only for tax year 2021. Despite its temporary nature, the program had dramatic impacts on improving a family’s ability to afford necessities, in reducing hunger and decreasing financial stress among parents.
Our nationally representative survey of CTC-eligible parents evaluated the reach and impact of the CTC. The survey was designed and distributed in consultation with colleagues at the Children’s Defense Fund, the Center for the Study of Social Policy (CSSP), the Center for Law and Social Policy (CLASP), ideas42, the National Women’s Law Center (NWLC), Prosperity Now, the Urban Institute-Brookings Institution Tax Policy Center, and UnidosUS. Those organizations collaborated with Ipsos, an international polling firm, and researchers at the University of California, Berkeley who provided technical guidance in formatting and analyzing the survey. The online survey was conducted in the second and third weeks of October 2021, after the IRS had distributed up to three months of advanced monthly CTC payments to families.
This October survey builds on the previous research conducted by the team through a similar survey in July 2021, prior to the distribution of the advance monthly payments. The July survey asked about respondents’ awareness of the upcoming CTC payments, their prior tax filing behavior, and how parents planned on spending their CTC payments.
This October national survey reached 1,012 families earning under $75,000 yearly and with children under 18 years old living in the household. Survey respondents were weighted statistically to yield nationally representative results. The topline averages reflect a margin of error equaling 2 to 3.5 percentage points. The October national survey did not include respondents from Puerto Rico or other U.S. territories due to their ineligibility for the advance CTC payments. Upcoming CTC research will include Puerto Rican families.
The October survey aimed to gauge awareness of the monthly CTC payments and the reach of the payments, and to measure how the payments were impacting family wellbeing. We also gauged the variation in access to the CTC among demographic groups and its impacts on family wellbeing depending on the family’s race, income, and educational attainment.
An earlier report documented the initial findings from our October 2021 CTC survey. In this report, we provide additional findings from that survey, along with detailed analyses for subgroups, including race, income, and educational attainment.
Berkeley researchers conducted follow-up, in-depth phone interviews with consenting survey respondents about their awareness of the CTC and how their CTC payments have impacted their lives. We illustrate this impact on families with quotes gained from these follow-up phone interviews throughout this report.
The key survey findings include:
- The CTC monthly payments reached a wide majority of eligible parents.
- The monthly CTC payments improved reported wellbeing for parents.
- Families – including Black, Hispanic, and white respondents – are spending their monthly CTC payments on necessities like food, rent, and clothing.
- The most common reasons respondents reported for not receiving the monthly CTC were confusion or opting for a lump-sum CTC refund at tax time.
- Very few families accessed the IRS non-filer portal, and those who utilized the tool often reported confusion when using it.
- Hispanic families, households with the lowest incomes, and eligible taxpayers with lower educational attainment have higher barriers to claim the expanded CTC compared to their counterparts.
- Other tax credits – like the Economic Impact Payments, the Earned Income Tax Credit (EITC), and the Child and Dependent Care Tax Credit (CDCTC) – are also being claimed at high rates by families with children.
These findings demonstrate the importance of the expanded CTC for families with children. Without the expanded monthly payments, parents will lack critical financial support that helped them afford essential bills, food, and rent. This means that children and families will have a harder time meeting their ongoing basic needs. Caregivers will face increased financial stress, some parents will face problems keeping child care and other barriers to holding down a job, and children will have fewer books, toys, and enrichment activities because of the CTC expansions expiring. Simply put, families are better off with this investment.
Filing a 2021 tax return, which families were able to do as early as January 24, 2022, offers the opportunity for families that received the advanced payments to receive the rest of the CTC they are eligible for. It also provides an opportunity for eligible families that have not received the advanced credit to get the entire CTC. In many cases, these will be the families with the lowest income. Families with children in Puerto Rico will have to claim their full CTC when they file a 2021 tax return. In the case of other eligible territories, families might have to contact their local U.S. territory tax agency.