The American Rescue Plan passed earlier this month included a massive expansion of the Child Tax Credit that is projected to cut child poverty nearly in half. The improved CTC will provide families with $3,600 per child under age 6 and $3,000 per child age 6-17, even for families with little or no income who were previously excluded from the full CTC.
Unfortunately, this crucial expansion is only scheduled to last for one year. Congress and the White House must work together to make this program permanent.
That is why the Children’s Defense Fund (CDF) and the Center for the Study of Social Policy (CSSP), co-chairs of the Automatic Benefit for Children (ABC) Coalition and more than 120 national and state organizations sent a letter to the Biden Administration calling for a permanent expansion of the CTC as well as several other much-needed improvements to the program that will help ensure that these benefits reach every child in America. These improvements include:
- Eligibility for all children in immigrant families, including children with Individual Tax Identification Numbers (ITINs). The 2017 Tax Cuts and Jobs Act required that children have Social Security Numbers (SSNs) to be eligible for the CTC for the first time—making an estimated 1 million children ineligible for the credit. Rolling back this exclusion of immigrant children is vital to undo the damage caused by the Trump administration.
- Eligibility for children involved in the child welfare system and others left behind by the current qualifying child rules in the tax code. Under current law, to be eligible for the CTC, a child must live with the person claiming the credit for six months of the year or more and have a specific relationship with that tax filer. Typically, they must be a child, grandchild, sibling, niece, or nephew of the tax filer. These rules deny benefits to children whose primary caregivers are more distant relatives, such as cousins, close family friends, chosen family, or fictive kin—roughly 330,000 children, disproportionately Hispanic children, are excluded because of the relationship test alone. The rules also deny benefits to children who may not spend at least six months in any single household, such as may be the case with children who move between the homes of different family members, children who are unhoused, or children who spend a portion of the year in out-of-home placements in the child welfare or the juvenile justice systems. Changing the definition of a qualifying child in the tax code is necessary, so that all children are eligible for the CTC regardless of their family structure or frequency of moving, and the benefit adequately supports families involved in intervening systems.
- Robust protections against overpayments. Families need to be protected from surprise tax bills at the end of the year, and held harmless for overpayments due to changes in the family’s income, marital status, or the number of qualifying children. Currently the bill protects certain families from overpayments due to changes in the number of children in their household, but families could still be on the hook for overpayments related to changes in income or marital status.
- Robust outreach. Many families who will be newly-eligible for the CTC will not have previously filed taxes. For these families to benefit, they need to know about their eligibility and be able to quickly and easily get connected to the tax system so they can get their monthly payments. Robust outreach in multiple languages and direct work with community based organizations to help spread information about the new benefit in a culturally competent manner is critical.
The expanded CTC is a policy revolution for children; we urge the Biden Administration to act quickly to put forward a plan to make it permanent and ensure these benefits reach every child in America. To read the full letter, click here.