Not getting a child tax credit in California? Maybe you should be
A major aim of the more generous child tax credit was to lift thousands of children out of poverty. But new data say that the families of hundreds of thousands of California children are not getting the tax break they badly need.
More than 656,000 children are at risk of not benefiting from the expanded credit, according to the nonpartisan California Policy Lab.
U.S. Treasury data put the number lower, at about 371,000.
The policy lab estimates that one-fourth of the children enrolled in safety net programs like SNAP may not get the credit, and they are the children who need help the most.
“Almost half of all children at risk of not receiving the Child Tax Credit are either part of families headed by undocumented adults,” said the California Lab report, “or are headed by an adult who would usually not file their own tax return because they could be claimed as a dependent.”
More than half the children are Hispanic, and one-third live in homes where English is not the primary language.
Bigger tax credits
An expanded credit was part of March’s American Rescue Plan, the Biden administration’s major effort to ease the economic pain caused by the COVID pandemic.
For 2021 only, families filing jointly and earning up to $150,000 could get a credit of $3,600 for each child 6 and under and $3,000 for those 6 to 17. As incomes go higher, the credit is reduced.
Families could choose to receive $250 to $300 per child each month this year starting in July.
For lower income families, the impact could be substantial. California families with incomes of less than $26,500 should see an average annual benefit of $4,250, according to the Institute on Taxation and Economic Policy, a Washington research group.
For most people, getting the credit is easy. People who file their income tax return electronically and use direct deposit should have payments sent to their account. Others are getting paper checks by mail or are given debit cards.
The studies found that those who arguably need the financial help most often were not getting it.
The Treasury relied on federal income tax returns and health insurance data to identify who may qualify but was at risk of not receiving it.
The California Policy Lab used a different set of data that considered people who may not need to pay taxes but do qualify for government safety net programs such as SNAP.
Those eligible to get the tax break and are not receiving it are usually families who did not file a tax return.
The data illustrate how those not getting the credit “have a family structure that differs from typical tax units and may have had little reason to file a tax return together prior to the pandemic,” the Lab reported.
Part of the problem is that people may not be aware of the tax credit.
Elaine Maag, principal research associate at Washington’s Urban Institute, cited studies showing that as people became aware of the credit they were more willing to claim it.
One change this year made the credit fully refundable. That brought in a huge number of children unable to take advantage of the credit in the past, when it was a lower amount, because their families were too poor to qualify.
If a family has no income, or its only income involves safety net programs like SNAP, it could qualify for the credit. It only would have to have a child younger than 17 at the end of last year with a Social Security number. The parent would not need a Social Security number.
Underserved parts of California
The Treasury data estimated that in the 90011 ZIP code, part of Los Angeles, 3,269 children had not taken advantage of the credit. No other Zip code area came close.
In the 95691 ZIP code in West Sacramento, 311 children were listed. Other areas with estimates of children whose families are not getting the credit:
▪ 95240 in San Joaquin County, 503 children
▪ 95358 in Modesto area, 599
▪ 95630 in Folsom area, 431
▪ 95341 in Merced County, 536
▪ 95762 in El Dorado Hills, 393
▪ 95648 in Lincoln area, 428
▪ 95355 in Modesto, 434
▪ 95834 in Sacramento County, 308
Promoting the tax credit
Government officials insist they’re pushing hard to find the affected families. State grants aim to make people aware of the different tax credits.
In Washington, the White House this summer led a Child Tax Credit awareness day that featured governments and community groups across the country seeking to help people get the credit.
But, Maag noted, the IRS “sees itself as a collecting agency and less of a benefits administrator.”
IRS did create new material to help people who usually don’t file a tax return. It used YouTube, social media and contacts with what it calls a “wide variety of groups” to find the children.
IRS worked with more than 11,000 partners and “made thousands of contacts with those that serve a wide variety of groups to include the homeless. The IRS coordinated with hundreds of federal agencies, state governments and local governments to share CTC messaging with their constituents and customers, especially the unbanked,” the agency said.
In California, a state grant program that in the past has often used nonprofit agencies to help get out information now is aiming to increase the statewide awareness of available tax credits.
This story was originally published October 4, 2021 at 5:00 AM.
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