Last week, September 15, the third round of payments for the newly enlarged federal government Child tax credit (CTC) has gone to millions of families with children across the country. The CTC is one of the nation’s premier anti-poverty programs, and the American Rescue Plan Act made significant, but temporary, changes to the policy. It increased the amount of funding available to families, broadened eligibility by making the credit fully refundable, and changed the timing of fund distribution. Half of the funds are now distributed through monthly payments that began July 15, rather than all payments being distributed in a lump sum when families file their taxes.
The expanded CTC is already leading to dramatic reductions in child poverty: payments in July held steady at around 3 million children across the country out of poverty that month. To maximize the impact of the CTC in North Carolina, our state leaders must ensure that every eligible family receives the credit, while Congress must make these improvements to the CTC. permanent.
A recent analysis of Institute of Social Policy explores how families in each state have used child tax credit payments. Families earning less than $ 150,000 per year are eligible for monthly payments of $ 300 for each child under 6 and $ 250 for children 6 to 17. Institute researchers found that the most common use for North Carolina Families bought food, then paid essential bills. Half of the families said they used the funds to buy food, and almost two in five families said they paid their bills. It is therefore not surprising that families eligible for the CTC have seen a decrease in severe food insecurity after the start of monthly payments. The share of severely food insecure families fell from 11 percent before payments were made to 7 percent in the weeks after payments started.
Yet the data also shows that the families most in need of these funds – those with the lowest incomes – were the least likely to report receiving the payment. Just over half of eligible families with an annual income of less than $ 50,000 reported receiving a payment from the CTC, compared to 70% of families with incomes between $ 100,000 and $ 150,000. This is because families who were not required to file tax returns in 2019 and 2020 may need to take additional steps to receive the monthly CTC payments. This includes many low income families and mixed status immigrant families.
An estimated 46,000 children in North Carolina families are newly eligible for the CTC but did not file tax returns in 2019 or 2020. Eligible families who are not yet receiving advance payments should apply for the CTC in using the IRS. registration tool before October 15th. Otherwise, they can receive a lump sum payment by filing a 2021 federal income tax return in 2022.
Our state can help every eligible family get this powerful tool to reduce hardship by ensuring every public body shares information about the CTC, funding local community organizations to carry out awareness raising and providing tax returns. on site in schools, social service departments, and health clinics.
The expansion of the Child Tax Credit is already increasing the financial stability of North Carolina families, making our communities and our state healthier and stronger. By extending this tax credit to as many families as possible and making recent improvements permanent, the CTC can be a major stepping stone on our state’s path to economic recovery.
Logan Harris is Senior Policy Analyst at the Budget & Tax Center.