The recent child tax credit revamp was designed to help the middle classes and lift millions of children out of poverty. But the program featuring monthly payments from the IRS is not reaching some 4 million eligible children, according to a new report.
The American Rescue Plan transformed the child tax credit from a phased-in credit for middle-class families into a potential cash injection for parents in need. Among numerous changes, Congress boosted the total amount from a maximum of $2,000 for each child to $3,600 for children under 6 and $3,000 for children under 18, with half of the money paid out as six monthly payments between July and December. And the credit is now fully refundable, meaning if your family's eligible credit amount is more than your federal tax burden — which is often the case for low-income households who do not have to file taxes — the difference is refunded to you.
According to a new report from the Center on Budget and Policy Priorities (CBPP), the IRS issued child tax credit payments for 59.3 million children in July. But there are still roughly 4 million eligible children who are missing out on these automatic payments. Why? In most cases, because their parents have not filed a tax return within at least the last two years, and have not registered with the IRS.
Among those missing out are roughly 2.3 million children already enrolled in a health insurance program (including CHIP and Medicaid) but haven't been counted on existing tax returns, plus 1.6 million children born in 2021 with Medicaid coverage. There is also a smaller pool of uninsured children who either don't appear on any tax documents or who are citizens themselves but whose parents are immigrants without Social Security numbers. The money owed to families who are eligible but missing out adds up to a total of approximately $13 billion in unclaimed credits, the CBPP estimates.
While the IRS has created a web portal for parents to enroll called the Non-filer Sign-up Tool, there are hurdles causing families to miss out on the payments. As CBPP points out, completing the process can be complicated for many of those in need. There is a major language barrier, as the tool is only available in English, as well as issues like lack of internet access and not having an email or home address.
In order to help families get enrolled, CBPP is recommending that local governments, government agencies and community groups take actions such as funding outreach campaigns to reach targeted areas with higher numbers of non-filers. They suggest messaging about the child tax credit on websites for government assistance programs like TANF, SNAP, Medicaid and WIC, and getting school districts to participate in outreach efforts.
How to get monthly child tax credit payments
If your child has a Social Security number, then no matter what your circumstances, your family is eligible to receive full monthly payments so long as you earn less than $150,000 per year if you're married or $112,500 if you're single and the primary caretaker.
In order to receive the benefits without having filed a tax return in 2020 or 2019, you'll have to enroll using the IRS's Non-filer Sign-up Tool.
To fill out the form, you will need to have access to a computer and either be able to read English or have someone translate for you. You'll also be required to provide:
- Your name
- Your current mailing address
- Your email address
- Your date of birth
- Valid Social Security numbers or Taxpayer ID numbers for yourself and your dependents
- A bank account number, routing number and what type of account it is (if you have one, otherwise the check will be mailed to you)
- An Identity Protection Personal Identification Number (IP PIN) if you've been issued one
The IRS will then determine whether or not you're eligible for payments. If you're deemed eligible, you'll automatically start getting the monthly payments.
In order to receive any missed payments, as well as the second half of the credit, you will still need to file a tax return next spring. Enrolling with the IRS can also help you receive other benefits that you may have missed out on, like stimulus checks and possibly the earned income tax credit (EITC), another tax credit designed to get money to families in need.