Child Tax Credit: Biden’s Plan to Reduce Child Poverty Depends on IRS’s Ability to Provide Help


While the vast majority of eligible families will automatically receive monthly payments, very low-income households that fall below the income threshold that requires people to file federal taxes will likely need to submit certain information to the Internal Revenue Service in order for the agency knows where to deliver the money.

More than 3 million children live in households that could be at risk of missing out, according to separate estimates from the Center on Budget and Policy Priorities and Propel, a private company that runs an app called Fresh EBT used by one in four beneficiaries of the Supplemental Nutritional Assistance program, known as SNAP.
A Propel poll found that 15% of its users, who are likely eligible for the Extended Child Tax Credit, had yet to file a 2019 or 2020 tax return as of mid-April. This means the IRS probably doesn’t have their information if it hasn’t used the non-filing tool available last year to get a stimulus payment. They will either have to file a return now or use an online portal the government plans to publish to allow parents to submit personal information.

“Things are going in the right direction. The password is on and we are seeing many households taking the necessary steps to file their taxes. But we are still going to see millions of children missing out,” said Stacy Taylor, head of partnerships. . and politics at Propel.

Delivering Stimulus payments was also difficult

About 8 million households did not receive the first stimulus payments, worth up to $ 1,200 per person, for the same reasons: they had not filed a recent federal income tax return and the IRS had no way of reaching them. The agency also released a similar online portal last year for people to claim their stimulus payments, including around half of non-filers who are eligible for a used payment. The tool could not solve all of the challenges for the homeless, who may not have internet access, a bank account or a permanent address.

But not all of these families are at risk of not receiving child tax credit payments. Many of them are not eligible because they do not have children.

Additionally, people now have the option to file a 2020 income tax return. Some who don’t normally file have been given more incentive to do so this year in order to claim a stimulus payment that they initially missed. About 2 million people received the payment after filing a 2020 return, according to the IRS.

A survey of a group of 500 low-income households in Washington, DC, found that 40% did not initially receive their stimulus payments. Now that number has dropped to 18%.

Who is eligible for the child tax credit?

The temporary allowance will be sent to households with more than 65 million children, or about 88% of children in the United States.

Eligible parents will receive $ 3,600 for each child under 6 and $ 3,000 for each child under 18. Until now, the credit could only reach $ 2,000 per child under 17. At least half of the amount will be paid out in monthly installments starting this summer. and the rest will be included in next year’s tax refund.

The enhanced portion of the credit will be available to lone parents with annual income up to $ 75,000 and co-filers earning up to $ 150,000 per year.

Congress also made the child tax credit fully refundable so that more low-income families could benefit from it. Previously, if the credit exceeded the taxes owed, parents could only receive $ 1,400 in reimbursement. These households must also have earned income of at least $ 2,500. The change could make 20 million more children eligible.

How to reach the poorest

The IRS is responsible for implementing the payments because they are an advance on an expanded child tax credit allowed by the most recent Covid relief legislation.

Families who aren’t otherwise required to file an income tax return should so the agency knows they’re eligible for the money – and the IRS is making a streamlined online form available to help those who aren’t. familiar with the tax filing process.

The online portal will allow parents to update their family size, marital status and income as well as opt out of monthly payments to qualify for the lump sum tax credit next year when the production of their declaration.

IRS said more details will be available soon. He did not provide further details at CNN’s request this week.

A report from Propel and the University of Michigan recommends that the government make the tool mobile-friendly, because about one in four low-income adults rely solely on a smartphone to access the Internet and more than half do not have no internet at home. He also recommends that the tool allow people to update their bank account information, which may have changed since their last tax return.

Normally, families claim the child tax credit on their federal income tax return. But this year is different because the relief program ordered the IRS to send up-front monthly payments aimed at helping people recover from the pandemic.

Although the move offers an improved payment, it is a temporary expansion. But there is Democratic support to make it permanent. One of Biden’s recent proposals, the American Families Plan, calls for increased payments until 2025.

IRS is underfunded, understaffed

The government announced earlier this week that the IRS is still on track to begin making child tax credit advance payments on July 15.

The agency was also tasked with sending out all three rounds of stimulus payments and managed the recent tax season while implementing the tax code changes included in the Covid relief bill passed in March. Meanwhile, he had a backlog of returns to process in 2019 after many IRS workers were sent to work from home during the pandemic.

The IRS has handled the extra work on a budget that has been cut by roughly 20% over the past decade, leaving it with outdated technology and smaller staff.

“There is no doubt that finding people who have not filed a tax return for 2019 or 2020 will be difficult for the IRS,” said Elaine Maag, senior research associate at the Urban Tax Policy Center. Brookings where she studies income support programs for low-income people. families.

But, she added, “no other agency is in a better position to provide payments to people right now than the IRS.”

CNN’s Tami Luhby contributed reporting.


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