IN-DEPTH REPORT

JUNE 17, 2021

The new Child Tax Credit has the potential to be life-changing, but some Providers users might miss out.

That would be life changing. The money I spend out of pocket on groceries after my food stamps runs out could go towards bills, car maintenance, or maybe I could accumulate some savings. 

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Starting on July 15, families will begin to receive payments of up to $300 per child under 6 and $250 per child 6 to 18. This expansion of the Child Tax Credit, included in the American Rescue Plan, is groundbreaking--it expands the amount of the Child Tax Credit and eliminates the earned income requirement to receive it. Its delivery is also unique: the new Child Tax Credit will provide half the total credit in advance monthly payments from July to December 2021, and deliver the second half via tax returns next year. 

 

The Child Tax Credit will be a lifeline to low-income families with children after a year of incredible hardship. If it were to be made permanent, the Child Tax Credit would be life-changing. However, we estimate that millions of children in Providers households are at risk of not receiving those monthly payments starting in July. 

Many Low-Income Families Do Not File Taxes

It would change our situation, our lives. I know it doesn't seem like much money but it would ease so many burdens.

The Child Tax Credit will be distributed via the tax system. However, many low-income families do not regularly file taxes because they do not earn enough income to be required to do so. For the many Providers households that do not work or earn little income, tax filing is generally perceived as high-risk, low-reward. The fear of audits and penalties looms large, and low-income families have a general understanding that you can only get money back if you’ve worked. Thus Providers households generally do not file taxes unless they are required to do so. 68% of Providers users with children under 18 are regular filers; 18% say they sometimes file taxes; and 14% do not file.

Providers users with children under 18

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regularly file tax return