Before the pandemic, 13 percent of children in Virginia lived in families earning below the poverty level (just under $26,000 for a family of four), and one in three children were economically disadvantaged. With the significant disruption caused by the pandemic – from job losses and reduced work hours to changing childcare needs and availability – most every parent has felt financial strain. Add in eviction uncertainty, reductions in nutrition benefits, and the end of enhanced unemployment benefits, and many families could be facing even more financial hardship in the coming months.
These are the reasons the American Rescue Plan, passed by Congress in March 2021, included an enhanced Child Tax Credit so parents could receive immediate financial assistance.
The Child Tax Credit will reach approximately 1.6 million children in Virginia, about 85 percent of all children. The American Rescue Plan enhanced the existing tax credit for families in several significant ways:
Increased amount per child: The credit was increased from $2,000 to $3,600 for children under six and from $2,000 to $3,000 for children ages six to seventeen.
Fully refundable: Prior to the expansion, the credit could only reduce the amount of taxes owed. The credit is now fully refundable, meaning that people will receive it regardless of their tax liability.
Monthly advance payments: As a credit on 2021 taxes, monthly advance payments are being released July through December. The remainder of the credit will be paid once families file their 2021 taxes. Families can opt out of advance payments if they prefer to receive the credit as one lump sum.
Improved impact for lowest-income families: Families who earn too little to pay taxes can also receive the Child Tax Credit. The IRS has created an online portal for non-filers to complete the necessary information to receive monthly payments.
Stabilizing Families on Shaky Ground
The impact of advance payments could be significant if all the families who are eligible are reached. The Center on Budget and Policy Priorities estimates that the expanded credit will bring about 249,000 children above or closer to the poverty line in Virginia.
To ensure that the credit reaches the most vulnerable families, advocates must be prepared to help families navigate these benefits and ensure their information is up to date to receive these advance payments easily. Currently, the IRS portals related to the Child Tax Credit are only available in English, meaning there is a need for translation and interpretation to assist families who do not use English as a primary language. For these families, access to translation and interpretation services to navigate these portals can be instrumental in ensuring there are no unnecessary delays in receiving the monthly allowances.
Anyone can help reach out to families and make sure they are aware of the new Child Tax Credit enhancements as well as how to navigate the IRS portals to ensure they receive their monthly allowances. There are guides available on GetCTC.org, along with other helpful resources to ensure families know what to expect so they can have all the information ready when they access the portals.
Go to childtaxcredit.gov to learn more about the enhancements, check your status for receiving payments, or make changes to receiving payments. Families can expect the monthly payments deposited directly to their bank accounts around the fifteenth of each month (they show up as IRS Tres 310 CTC CHILD or a check from the US Treasury).
Temporary Assistance for a Long-Term Problem
While the expanded Child Tax Credit is likely to have a big impact on childhood poverty and family economic stability, the benefits are short-term, as the changes are only in place for the 2021 tax year. In previous years, it is estimated that approximately 530,000 children from low-income families have been ineligible for the full tax credit because the families did not make enough money to receive it. Without the enhancements that make the credit fully refundable, the credit excludes the lowest-income families who would likely benefit from it
the most.
To have long-lasting impacts for families and enduring reductions in the rates of childhood poverty, Congress must take action to approve the enhancements permanently. President Biden has proposed making the enhancements permanent in the American Families Plan.
Congress can act to make the Child Tax Credit expansion permanent, prioritizing family economic security, particularly for the most in-need families. You can advocate for families by contacting your lawmakers in Congress: Senators Tim Kaine and Mark Warner, and the representative
of your congressional district.
Learn more about how you can help families receive the child tax credit here.
Photo: Sheri Shannon
