Notably, low-income parents were more likely than their middle- or high-income counterparts to not know if they qualified or report that they did not qualify, even though many of these parents would have been eligible. Upon learning additional information about the 2021 changes to the CTC in the poll, 74% of parents said that they qualified, while 14% reported they did not qualify and 12% did not know. Responses to questions about the 2021 version of the CTC demonstrate that some taxpayers lacked understanding of the credit’s temporary expansion and could have benefited from broader or better-targeted outreach at the local, state, or federal levels. Administrative hurdles likely also depress claiming rates for low- and middle-income families. While the claiming rate among low-income households can be partially explained by the credit’s phase-in with earnings prior to 2021, it does not explain the difference between high- and middle-income parents. Although 84% of high-income parents (annual household income over $100,000) reported claiming the credit, only 77% of middle-income (annual household income of $50,000-$100,000) and 66% of low-income parents (annual household income below $50,000) have done so. Notable income and racial disparities exist in current claim rates. Those who did not say they claimed the credit break down as follows: 8% of parents said that their child has been claimed by another taxpayer, while 10% reported never qualifying to claim the CTC, and 9% were unsure if they previously claimed the credit. Approximately three-quarters of parents reported ever claiming it before-substantially lower than the percentage who are familiar with the CTC. This high degree of familiarity, however, does not necessarily translate into claiming the CTC. Note : N umbers may not add to 100% due to rounding. The California Effect Seen Through Children’s Online Privacyīuilding Higher Education Rainy Day Fundsįigure 1: How large an impact, if any, did the Child Tax Credit have on your family’s finances over the past year? Low-income parents, Black and Hispanic parents, younger parents, and parents in larger households were particularly likely to report that the CTC had a large impact. Nearly two-thirds (63%) of parents who qualified for the CTC in 2021 said that the credit had a large or somewhat large impact on their family’s finances. For tax year 2022, the CTC has reverted to its previous form, unless Congress takes further action this year.
Credit insights full#
The law also introduced the option for families to receive the CTC monthly instead of in full at tax filing time, with half of the 2021 credit paid out in installments from July to December 2021.
For one year only, the ARP increased the maximum credit amount to $3,000, introduced a larger credit of up to $3,600 for children ages 5 or younger, raised the maximum age of qualifying children to 17, and eliminated the CTC’s refundability cap and its phase-in, making it fully available to low-income families regardless of earnings. The American Rescue Plan Act (ARP), a broad pandemic relief bill, significantly expanded the CTC for tax year 2021. The CTC expansion for tax year 2021 significantly impacted families’ finances, and parents continue to feel the effects of the end of monthly CTC payments.
Credit insights how to#
This survey expands on BPC’s 2021 report, “ How to Sensibly and Permanently Expand the Child Tax Credit and Earned Income Tax Credit ,” with key findings highlighted below.ġ. Understanding parents’ experience with and perception of the credit is vital to ensuring that any policy changes optimize the CTC and effectively support American families.īPC and Morning Consult conducted a survey of 1,500 parents 1 from February 17-22, 2022, to measure awareness of and familiarity with the CTC, understand reactions to temporary changes to the credit for 2021, and identify areas for improving its administration to increase accessibility. While Congress has expanded the CTC numerous times with the support of each administration since its enactment in 1997-most recently through the 2017 Tax Cuts and Jobs Act and 2021 American Rescue Plan Act -its future continues to be a topic of debate. The Child Tax Credit (CTC) provides critical financial support to millions of American families by offsetting the high cost of raising children. Give Search Keywords Submit Policy AreasĪccessing the Child Tax Credit: Insights from American Parents.
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