Research offers insights into which low-income families are not receiving Child Tax Credit payments

With the last monthly Child Tax Credit payment of the year set for distribution on Dec. 15, new research offers insights into which low-income families are still not receiving their checks.

The reasons vary from another parent claiming the credit to processing issues and unknown reasons that indicate barriers in the tax filing process.

In March, Congress passed a one-year expansion of the Child Tax Credit to provide low- 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, which started in July, and the other half will be part of families’ 2021 tax refunds. The expanded CTC is already estimated to have reduced child poverty (PDF) by about 30%, thanks to the monthly payments, 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. The survey was fielded through the Providers app that helps people manage their Supplemental Nutrition Assistance Program benefits.

Natasha Pilkauskas and Katherine Michelmore, both University of Michigan associate professors of public policy, partnered with Propel, the creators of the Providers app, to analyze the survey data. A policy brief titled “Families with Low Incomes and the Child Tax Credit: Who is Still Missing Out?” outlines their findings.

Among the 32% of families who did not receive the October CTC payment, they found:

• 4% had filed for the credit and were awaiting payment
• 7% reported not receiving the credit for “valid” reasons, such as opting to get the lump sum payment or another parent receiving the credit
• One in five eligible parents (21% ) did not receive the October CTC payment for other reasons

Our goal with this research was to differentiate among the parents who reported they did not get the Child Tax Credit payment, to understand which families are getting left out. We were especially interested in the characteristics of the parents who should be eligible to get the Child Tax Credit but report not getting the credit for reasons that are largely unclear.”

Natasha Pilkauskas, associate professor of public policy, University of Michigan

The analysis also showed employed parents and families with at least $500 of monthly earnings were substantially more likely to receive the October CTC than unemployed parents and families with little or no monthly earnings, suggesting the expanded CTC is still missing the most vulnerable families.

Hispanic parents and those who took the survey in Spanish were much less likely to have received the October CTC, despite relatively high rates of tax filing. This indicates the barriers faced by these groups, the researchers said.

“This discrepancy is especially troubling,” Michelmore said. “Ongoing outreach efforts should focus on better understanding the tax-filing needs of these families, and the IRS should review its systems to make sure it is not incorrectly withholding the tax credit from these families.”

In addition to asking whether families had received the CTC, the survey asked recipients how they are spending the extra $250 or $300 per month, per child. For the October payment, the most common uses were paying bills (75% of parents), paying rent or mortgage (12%), buying child necessities like diapers (9%) and buying clothes for their child (9%); parents could report more than one way they spent the money.

“We see families spending the money on basic necessities and their children. So we know eligible families who are not receiving these monthly benefits are missing out on a potentially vital source of income,” Pilkauskas said.

Eligible families can still claim the expanded Child Tax Credit by filing their 2021 taxes in 2022. Visit Child Tax Credit: What You Need to Know to learn more, including information in Spanish, Arabic and Bangla.