Receipt and Usage of Child Tax Credit Payments Among Low-Income Families: What We Know (October 2021)
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A brief headed Receipt and Usage of Child Tax Credit October 2021 Payments Among Low-Income Families: What We Know, by Natasha Pilkauskas and Patrick Cooney. It reports on two surveys of low-income families using the Providers application, fielded with Propel on August 1-13 and September 1-15, which asked about the July and August CTC payments. Under Key Findings, it says 66 percent of parents reported receiving the CTC in July, rising to 68% in August, and that 75% of respondents who received a payment said they used the money to help pay bills. It also says 94% of families called the credit somewhat or very useful and 92% of parents say it should continue post the pandemic.
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“Receipt and Usage of Child Tax Credit Payments Among Low-Income Families: What We Know (October 2021).”
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RECEIPT AND USAGE OF CHILD TAX CREDIT OCTOBER 2021
PAYMENTS AMONG LOW-INCOME FAMILIES:
WHAT WE KNOW
By Natasha Pilkauskas and Patrick Cooney
INTRODUCTION
KEY FINDINGS
In March, Congress passed the American Rescue Plan Act,
which included a dramatic expansion of the Child Tax Credit
(CTC). While the previous version of the Child Tax Credit was an • Only 2% of families with children reported not
important anti-poverty tool, families with low or no earnings having heard of the CTC in both the August and
did not qualify for the full credit, or any credit at all, blunting its September surveys.
potential impact. The expanded Child Tax Credit is much larger
• Sixty-six percent of parents reported they received
than the previous credit—worth $3,000 per child ages 6-17 and the CTC in July. This figure increased to 68% in
$3,600 per child under 6—and is available to all low-income
August.*
families, even those with no earnings. In addition, half of this
year’s CTC is being paid out in monthly installments, from July • Few low-income families (1-2%) opted out
through December, essentially taking the form of a monthly of monthly payments, choosing instead to receive
child allowance we see in many other Western industrialized the credit as a lump sum in 2022, and
nations. Estimates suggest the expanded CTC could reduce child approximately 15% of parents reported not getting
poverty in the United States by 49%, a historic achievement.1 it themselves but for reasons that do not raise
Data collected from the U.S. Census Bureau’s Household Pulse concerns about access (e.g., the other parent
Survey showed a 30% decline in food insufficiency for adults claimed it or the credit is pending).
with children following the initial monthly payments2 and a • Roughly 13% of parents were unsure why they
43% decline in food insufficiency for low-income households didn’t get the August payment or reported
that received the initial payment.3 Researchers from Columbia confusion about eligibility, a figure that was down
University’s Center on Poverty and Social Policy estimate the from 19% for the July payment.
first two monthly payments cut the child poverty rate by nearly
• Parents with lower levels of education and those
30%, keeping 3.5 million children out of poverty.4
who are primarily Spanish speakers were most
likely to report not having received the July or
However, while the potential anti-poverty impact of the expanded
CTC is extraordinary, we also know some families may face August payments.
obstacles to receiving their payments. Due to low earnings, many • The vast majority of respondents who received a
low-income households do not traditionally file taxes, the primary CTC payment said they used the money to help pay
way in which families are enrolled to receive the credit. In addition, for bills (75%) and/or other basic living expenses
tax-filing households may face other barriers to receiving their (like rent or food). Many reported using the money
payments, due to residential instability or limited access to banking on child-related expenses like school supplies and
services. children’s clothing.
• Ninety-four percent of families said the credit was
To understand more about how the expanded CTC is impacting
somewhat or very useful in helping them make
families and inform strategies to expand access to the credit, we
ends meet, and 92% of parents say the CTC should
partnered with Propel, the creators of Providers (formerly Fresh
continue post the pandemic.
EBT), a free mobile application that helps over 5 million families
manage their Supplemental Nutrition Assistance
These CTC receipt figures are lower than those obtained by Propel through an in-app pop-up survey of Providers users. Because of the brief nature of the pop-up
1 survey we cannot directly assess if differences across surveys are driven by sample characteristics, the timing of the surveys, or method of distribution.
Program (SNAP) benefits. This brief discusses findings from no education beyond high school. Most of the respondents
two recent surveys with low-income families who use the are women (95%) and 28% are partnered. The parents in our
Providers application, many of whom are eligible for the CTC. sample are also racially and ethnically diverse: 41% are non-
We found that while most respondents received the CTC and Hispanic Black, 32% non-Hispanic White, and 19% Hispanic.
used it to pay for essential household expenses, a substantial
share of CTC-eligible respondents did not receive their first CHILD TAX CREDIT RECEIPT
two monthly payments, suggesting more outreach and
Respondents with coresident children under the age of 18 were
supports are needed to achieve universal receipt.
asked if they received a CTC payment in August (see Figure 2).
The share who reported receiving the CTC was up slightly
THE STUDY in August (68%) from July (66%). The average credit amount
Every month, Propel invites users of the Providers application was $300-$600 (see Figure 3). In July, 86% of respondents
to take a survey on a range of topics related to household reported getting the first payment by direct deposit, but in
financial stability. Although the specific questions vary from August this decreased to 73% (see Figure 4). This is likely
month to month, the Propel survey generally asks families driven by an IRS error that resulted in a number of families
about employment, material hardship (i.e., ability to pay for who received the credit via direct deposit in July receiving it by
housing, food, and utilities), debt, and public benefit use. check in August.5 In both the August and September surveys,
We partnered with Propel to include a battery of questions only 2% of respondents reported not having heard of the CTC,
related to the Child Tax Credit on its monthly survey. This and another 3% were unsure if they had received the credit.
brief discusses results from the August 1-13 and September Although the credit is available to be paid out in monthly
1-15 surveys, which asked about the July and August CTCs installments, parents also have the option of getting the credit
respectively. More than 4,000 people took the August survey as a lump sum when they file their 2021 taxes, but only 1-2%
and more than 6,000 took the September survey, and roughly reported taking that option.
half of respondents lived with children under 18 (46% in
the August survey and 55% in the September survey). The
analyses reported here focus only on those respondents with FIGURE 2: RECEIPT OF THE CTC, JULY AND AUGUST
coresident children (we refer to these respondents as parents
but some may be non-parental primary caregivers). We focus Yes No Opted for lump sum I don’t know I haven’t heard of the
Child Tax Credit
our discussion on the September survey but also highlight
66% 28% 1%3% 2%
changes between the August and September surveys.
July
FIGURE 1: HOUSEHOLD MONTHLY EARNINGS, AUGUST 68% 25% 2%3% 2%
25% August
20%
0% 20% 40% 60% 80% 100%
15%
Note: Among respondents who reported having a child under the age of 18.
10%
5%
20% 17% 20% 25% 13% 4% FIGURE 3: HOW MUCH MONEY DID YOU GET FROM THE CTC?
0%
No earnings <$500 $500-999 $1,000-1,999 $2,000+ Prefer
not to say July August
40%
35%
Note: Sample is restricted to households with children under the age of 18.
30%
25%
Families with children in this study are highly economically 20%
disadvantaged (see Figure 1 and Appendix Table 1 for details). 15%
Approximately one-fifth reported having no household earnings 10%
in the month of August and another 17% reported less than 5% 39% 37% 35% 36% 18% 19% 8% 8%
$500 in household earnings. Twenty-one percent of parent 0%
$300 or less $301-$600 $601-$900 $901+
2 respondents do not have a high school degree and 40% have
Note: Among respondents who said they got the CTC.
FIGURE 4: HOW DID YOU RECEIVE THE CTC PAYMENT? TABLE 1: WHY HAVEN'T YOU GOTTEN THE CTC?
JULY AND AUGUST
PERCENT OF CAREGIVERS
July August
100%
JULY AUGUST
80%
I do not know 11 8
60%
Other parent/relative claimed the credit 5 5
40%
Not eligible 4 4
20%
Filed taxes/applied but have not yet
86% 73% 14% 27% received/pending/amended
4 4
0%
Direct deposit Check
I don't know I needed to submit forms/tax
3 2
return to receive it
Note: Among respondents who said they got the CTC.
I don't file taxes/haven't filed 1 0
REASONS FOR NOT GETTING THE CTC Went to the wrong bank account 1 1
In order to better understand why some parents did not receive
Child was born in 2021 0 1
their initial CTC payments, we also asked parents who did not
receive their payments why they did not receive them (see
It was taken to pay child support 0 0
Table 1). About 5% of all parents reported that the other parent
(or another relative) got the credit and another 4% of parents I opted not to get it because I'm worried
0 0
about losing other benefits
said they had filed taxes but had not yet received the credit.
Other person claimed/another falsely
0 0
About 2% of parents reported a new custody arrangement, claiming
a child that was born in 2021, or child support debt as the New custody agreement/custody issue 0 0
reasons for not receiving the CTC. Another 2% reported
administrative errors (e.g., payments going to the wrong bank Issue with tax system/other tax problem
- 1
(audit, verification)
account or wrong address, tax verification issue) as the reason
for not receiving their payments. Finally, 2% opted to receive Address wrong/changed - 1
the credit as a lump sum. Thus, although only 68% reported
getting the August CTC payment, another roughly 15% of Other 1 1
respondents reported not getting the CTC for reasons that do
Note: Only asked of those who said they did not get the CTC. Respondents
not suggest lack of access of or knowledge about the CTC, but may select more than one option. In July, 518 respondents answered
some other reason.6 Together these findings suggest more this question out of 1,877 caregivers. In September, 871 respondents
answered this question out of 3,511 caregivers. The percents reported
than 80% of respondents with a child received their second here are share of all caregivers.
payment, were waiting on their payment, or understood why
they had not received the payment.
access to CTC payments. The non-filer portal is specifically
However, 13% of parents did not know why they didn’t get the designed for low-income households that either have low or
credit or reported a lack of knowledge about the CTC and the no earnings and may not have previously been required to file
process by which they would receive the CTC. Eight percent taxes. The update portal allows families who have filed taxes
of caregivers said they did not know why they didn’t get the to check on the status of their payments or update their bank
CTC and another 5% reported they were not eligible (though account information or mailing address.
they likely are), didn’t file taxes, or didn’t realize they needed
to file taxes to claim the CTC. Although 13% of low-income Only 23% of respondents had used the non-filer portal, and
parents still do not understand how to claim the CTC, this less than half of those who used it said they were successful in
share of parents is down from 19% in the August survey. Thus, processing a return.7 Thirty-seven percent of parents reported
it appears that low-income parents are becoming more aware trying to use the update portal, but one-quarter of that group
of the CTC and how to claim it. reported being unable to log in. Indeed, to initially log in to the
update portal, users need to have an email address, receive a
The survey also asked if parents used the IRS non-filer portal log-in code to their phone, scan a photo ID, and take a picture
3 or update portal, two recent online tools deployed to expand of themselves with a computer or smartphone, which is then
run through facial recognition software. And while the non- The IRS corrected the glitch and provided affected households
filer portal is less burdensome than a full tax return, users with their July payment in August.9 Interestingly, we also find
unfamiliar with the tax system may get tripped up by terms the share of Black families who received the August CTC was
like “adjusted gross income.” These survey findings suggest 5-6 percentage points higher than that of any other racial or
usability and possibly awareness of these portals may be a ethnic group.10
barrier to getting the CTC. However, it is worth noting that
that use of both portals was slightly higher in the September Second, although we saw an increase in the rate of receipt
survey than the August survey.8 among Hispanic respondents, we also examined whether there
were differences in the rate of CTC receipt by survey language.
Although only 5-6% of survey respondents took the survey
WHO WAS LEAST LIKELY TO GET THE CTC?
in Spanish, here we see a large difference in CTC receipt by
To better understand which low-income families are not getting dominant language. In July, only 38% of Spanish language
the CTC, we ran a series of analyses looking at differences respondents reporting getting the CTC as compared to 67% of
across different demographic groups. In Figure 5, we show the English survey respondents. By August, the gap in receipt had
share of parents who report receiving each CTC payment by reduced significantly but remained: 54% of Spanish language
race and ethnicity, education level, and survey language. respondents received the CTC compared with 69% of English
language respondents. The improved receipt among Spanish
A few findings stand out. First, the share of parents who
language respondents may in part be driven by the ITIN
report getting the CTC varies by race and ethnicity. Although
correction, but a gap remains nonetheless.
Hispanic parents were far less likely to have received the July
CTC payment, by August, Hispanic families were receiving Some of the difference in receipt by primary language may be
the CTC at similar rates to White families and those of other driven by differences in tax filing: 74% of Spanish language
racial and ethnic backgrounds. The improvement in the rate of survey takers reported filing 2020 taxes as compared with
receipt among Hispanic households may in part be driven by 79% of English language survey takers. Five percent of
an IRS glitch that resulted in some immigrant-led households Spanish language survey takers also reported not having
who file taxes with an ITIN not receiving their July payment. heard of the CTC, compared with 2% of English survey takers.
FIGURE 5: PERCENT WHO RECEIVED THE CTC BY DEMOGRAPHIC GROUPS
July August
67%
Black
71%
69%
White
66%
56%
Hispanic
65%
63%
Other
(Asian, NA, PI, 65%
Multiracial)
67%
English survey
69%
39%
Spanish survey
54%
56%
<High school
60%
67%
High School
68%
68%
Some college
71%
73%
Associate +
73%
0% 10% 20% 30% 40% 50% 70% 80%
60%
4
However, even these differences in tax filing and knowledge of
the CTC are unlikely to fully account for the lower share of CTC TABLE 2: HOW DID YOU USE THE CTC?
receipt among Spanish language respondents, who may be PERCENT OF CAREGIVERS
facing additional constraints. These findings point to a need to WHO RECEIVED CTC
direct more outreach to Spanish language households. JULY AUGUST
Lastly, we examined differences in receipt of the CTC by BILLS AND LIVING EXPENSES
education. We find an education gradient, in which those Paid bills 72 75
parents with greater education are the households most
likely to have received the August CTC payment. When we Paid rent/mortgage/for housing 9 9
look at differences between July and August CTC receipt by
Paid of loans/debts 5 4
education, we find that although those without a high school
degree continue to have the lowest recipiency rate, the rate Bought food 5 7
improved most for this group between July (56%) and August
(60%). Some of the differences by education may be driven by Bought household necessities (toiletries,
4 5
cleaning supplies etc)
differences in tax filing: 72% of parents with less than a high
school degree filed 2020 taxes, compared with 80% of those Paid for gas or car expenses 2 5
with a high school degree, 80% of those with some college and
CHILD-RELATED EXPENSES
87% of those with an associate degree or more. Differences in
receipt do not appear to be driven by awareness of the CTC as Bought school supplies 11 14
those without high school degrees were only somewhat less
Bought school clothes/uniforms 8 10
aware of the CTC (3%) than those with more education (2%).
Bought child necessities (diapers, wipes, other) 8 8
HOW DID YOU USE THE CHILD TAX CREDIT AND
WAS IT USEFUL IN MAKING ENDS MEET? Bought child clothes 6 4
We asked parents an open-ended question about how they Paid for child care 4 6
used the CTC payment (see Table 2). The vast majority reported
using the money for basic living expenses like paying bills OTHER
(75%), paying rent/mortgage (9%), paying off debt (4%) and Put money in savings 2 2
buying food (7%). Many parents also reported using the money
for expenses that are directly child-related. Twenty-four Other 4 4
percent reported using the money for school supplies/school
Clothes (not specified kid/adult) 2
clothes or uniforms. Another 4% reported buying children’s
clothing, 8% bought other child necessities like diapers or N 1,151 2,208
“things my child needs,” and 6% said they used the money for
Note: Categories are not mutually exclusive (people could select multiple
child care. Relatively few parents (2%) reported putting the responses). Sample is restricted to parents who received the CTC and
money into a savings account.11 Spending patterns for the July who provided a response. Percents may sum to more than 100%.
and August CTCs were quite similar, although more parents
reported using the August CTC for school-related expenses.
FIGURE 6: HOW USEFUL HAS THE CTC BEEN TO
In addition to asking parents how they spent the money, we HELPING YOU MAKE ENDS MEET?
asked parents how useful they found the payments in helping
them make ends meet. Overwhelmingly, parents report that 80%
the CTC was useful in helping them to make ends meet, with 70%
94% of respondents reporting it was very or somewhat useful 60%
(see Figure 6).
50%
We also asked in another open-ended question about how 40%
the CTC affected their family or household. The majority of 30%
respondents reported positive sentiments—that the CTC was 20%
helpful or a blessing. A number of respondents reported 10%
70% 24% 2% 4%
being able to “catch up” or “make ends meet.” However, 16% 0%
Very useful Somewhat Neither useful Not very/
reported the initial CTC payment did not provide enough help. useful nor unuseful Not at all useful
5
Note: Among respondents who said they got the CTC.
This could be a function of the fact that those with very low CONCLUSION
incomes may still struggle to afford basic expenses despite
This study offers an initial glimpse into the extent to which
these additional payments.
the expanded Child Tax Credit is reaching and improving
Lastly, we asked parents to tell us how important it will be the welfare of low-income families. The majority of families
for the government to continue the expanded CTC once the in our study received the July and August CTC payments
coronavirus pandemic is over (see Figure 7). As might be and found them to be a great help. However, some families
expected given the general positive sentiments that parents continue to report confusion around the process. Parents
expressed about the CTC, the majority (92%) report that it will with limited English proficiency, as well as those with less
be important to continue the CTC in the future. education, report relatively low recipiency rates. Other
research has found that recipiency rates decline with income,
perhaps because those with less income are less likely to
file taxes.12 And many parents report difficulty accessing the
FIGURE 7: HOW IMPORTANT IS IT FOR POLICYMAKERS online tools meant to facilitate the process of registering
TO CONTINUE GIVING FAMILIES THE CTC ONCE THE with the IRS. These findings suggest policymakers should
CORONAVIRUS PANDEMIC IS OVER? continue to pursue strategies that increase awareness of and
support for accessing the CTC among those who are currently
80% not receiving their payments. Future surveys will help us
70%
understand if more low-income families learn about and
receive the CTC and how spending patterns change over time.
60%
50% ABOUT THE AUTHORS
40%
Natasha Pilkauskas is an associate professor of public policy
at the Gerald R. Ford School of Public Policy at the University
30%
of Michigan.
20%
Patrick Cooney is assistant director of policy impact at U-M’s
10% Poverty Solutions, a university-wide presidential initiative that
78% 14% 6% 2% aims to find new ways to prevent and alleviate poverty through
0%
Very
important
Somewhat
important
Neither important
nor unimportant
Not very/
not at all important
action-based research.
The authors would like to acknowledge Propel for its
Note: Sample is restricted to respondents who were familiar with the CTC and
who had children under 18 partnership in fielding the survey and sharing results for
analysis. We would also like to thank Samiul Jubaed, Katherine
Michelmore, and Luke Shaefer for their assistance and input.
6
ENDNOTES
1 Sophie Collyer, Christopher Wimer, and David Harris, “Earnings 7 Though it is often referred to as a non-filer portal, those who use it are
Requirements, Benefit Values, and Child Poverty under the Child Tax filing a simplified tax return
Credit,” Columbia University Center on Poverty and Social Policy 3, No. 3
(March 2019). 8 31% of respondents reported using the update portal and 21% used the
non-filer portal in the August survey.
2 Claire Zippel, “After Child Tax Credit Payments Begin, Many More
Families Have Enough to Eat,” Center on Budget and Policy Priorities, 9 https://www.washingtonpost.com/business/2021/07/30/immigrant-
August 30, 2021. parents-child-tax-credit-delays/
3 Zachary Parolin, Elizabeth Ananat, Sophie Collyer, Megan Curran, and 10 An analysis of tax filing shows that 81% of Black parents, 80% of White
Christopher Wimer, “The Initial Effects of the Expanded Child Tax Credit parents, and 77% of Hispanic parents had filed 2020 taxes. Thus, tax
on Material Hardship,” Columbia University Center on Poverty and Social filing cannot explain the higher rate of receipt among Black families.
Policy, Poverty and Social Policy Working Paper, August 30, 2021.
11 Far fewer respondents in our survey reported using the CTC on food
4 Zachary Parolin and Megan A. Curran, “Expanded Child Tax Credit Leads expenses as compared with the nationally representative Census
to Further Decline in Child Poverty in August 2021,” Columbia University Household Pulse Survey. Unlike the Census Pulse survey which asked
Center on Poverty and Social Policy, Poverty and Social Policy Fact Sheet, respondents to indicate how they used the CTC from a set of choices,
September 24, 2021. Researchers from Columbia have been generating we asked an open-ended question. Additionally, 84% of parents in our
monthly poverty rates since the onset of the pandemic. sample are currently receiving SNAP benefits; thus, they may have had
less need to use their CTC on food expenditures.
5 https://www.irs.gov/newsroom/irs-families-now-receiving-august-child-
tax-credit-payments-still-time-for-low-income-families-to-sign-up 12 Parolin et al., “The Initial Effects”
6 This estimate is not precise as respondents could pick multiple options
for why they did not get the CTC.
7
APPENDIX
APPENDIX TABLE 1: CHARACTERISTICS OF FAMILIES IN THE STUDY SAMPLE
JULY AUGUST JULY AUGUST
AGE RACE/ETHNICITY
18-24 7% 8% Black 32% 41%
25-34 36% 42% White 39% 32%
35-44 38% 37% Hispanic 20% 19%
45-54 14% 10% Other 10% 8%
EDUCATION
55+ 6% 4%
<High school 8% 6%
HOUSEHOLD STRUCTURE
Household size 4.24 4.39 Some high school 16% 15%
Partner/spouse 31 28 High school 37% 40%
Extended family (parents, siblings, aunts/uncles) 12 13 Some college 28% 28%
Other (friends, roommates) 4 4 Associate degree 8% 7%
NUMBER OF KIDS 2.6 2.69 College + 4% 3%
HOUSEHOLD MONTHLY EARNINGS
Under 6 0.91 0.98
No earnings 22% 20%
Ages 6-18 1.65 1.71
<$500 15% 17%
GENDER
Woman 94% 95% $500-999 18% 20%
GEOGRAPHY
$1,000-1,999 26% 25%
Rural 33% 32%
$2,000+ 14% 13%
Urban 45% 47%
Prefer not to say 5% 4%
Suburban 22% 21%
Note: Sample is restricted to households with children under the age of 18.
8
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