Berkeley, CA, September 15th, 2021 — New research released today by the nonpartisan California Policy Lab (CPL) finds that hundreds of thousands of California’s most vulnerable families are likely missing out on the recently expanded federal Child Tax Credit (CTC). CPL compared enrollment data for safety-net programs to tax-filing data to see which low-income families were most at risk of missing out on advanced payments of the credit because they didn’t appear on a past tax return. While most families enrolled in safety-net programs in California have started receiving advanced CTC payments, CPL found that families who were less likely to file taxes before the pandemic are the most likely to miss out on the CTC without further action.
“There is a real push to get the Child Tax Credit to the lowest-income families. But to do that, we need to understand who these families are and what barriers they may face to claiming it,” explains report co-author Aparna Ramesh, Senior Research Manager at the California Policy Lab at UC Berkeley. “Our research sheds light on which families are most likely to miss out on the CTC and will help the State of California proactively connect these families with the federal credits for which they’re eligible.”
Starting July 15th, families with eligible children who appeared on either a 2019 or 2020 tax return began receiving monthly payments of the credit automatically. However, children whose parents did not file taxes, because they weren’t required to, are not receiving their payments automatically and need to take further action to claim the CTC. These families can use GetCTC.org to fill out a simple form to claim the CTC and federal stimulus payments, instead of completing a full tax return.
This month the California Department of Social Services (CDSS) will launch a multilingual and multi-modal outreach effort informed by CPL’s research findings. CDSS will contact families with children at risk of missing out on stimulus payments using targeted voice messages, text messages, and emails. These families will be connected to GetCTC.org, live assistance, and other mobile-friendly tax filing solutions to help them file a tax return.
The People Lab at UC Berkeley, Code for America, CDSS, and CPL are also collaborating on an evaluation of the effectiveness of targeted outreach to non-filers, referrals to GetCTC.org, and online and hotline assistance to fill out the simple non-filer tool. Findings from this work will continue to inform strategies for connecting California’s most vulnerable with valuable tax benefits.
Which families are most at risk of missing out on the CTC?
By comparing safety-net-enrollment data to 2019 tax-filing data, CPL projected that about two million California families are receiving advanced CTC payment because they appeared on at least a 2019 tax return. However, CPL found that 650,000 children eligible for the CTC did not appear on a 2019 tax return, and are therefore at-risk of missing out on the CTC.
Of children at risk of missing out on the credit:
• Over half (56%) are identified as Hispanic.
• One-third live with families whose primary language is not English.
• Almost half are part of families headed by either an undocumented adult or by an adult who would usually not file their own tax return because they could be claimed as a dependent.
• Children identified as American Indian or Alaska Native, as well as children who live in northern or more rural counties, are at highest risk of not receiving the credit (see interactive map on CPL’s website).
CPL was able to analyze household and income data for about half the children at risk of missing out on the CTC. Among these families at risk:
• Eighty-four percent are headed by single adults.
• Over two-thirds had no observed wage earnings.
California Policy Lab’s recommendations to connect eligible families to the Child Tax Credit
1. States should play a key role in connecting low-income families to the credit. This could include conducting targeted outreach (for example to eligible families enrolled in safety-net programs) as well as administering higher-touch interventions like hotlines, remote tax-preparation services, and helping families to file a simple return.
2. The IRS should enable states to identify and contact eligible but at-risk families. Using a secure portal, state human services agencies could verify if program enrollees had been issued the CTC. This would enable states to focus resources on families who had not yet claimed the credit.
3. The IRS should explore how to make it easier for non-filers to claim all of their CTC. Half of the credit is being disbursed in advance via monthly installments. But, families will have to file a 2021 tax return to claim the other half of the credit, and tax filing continues to be an obstacle to claiming. Policymakers should provide resources or simplify the process for these families to claim the rest of the credit.
CPL used anonymized safety-net-enrollment data covering individuals enrolled in several programs managed by the California Department of Social Services between January 2019 and June 2020, linked to anonymized state tax-filing data for Tax Year 2019. While eligibility for the CTC is based on tax filing in either 2019 or 2020, CPL did not have access to 2020 tax-filing data for this analysis. Including 2020 tax-filing data in the analysis would lower the estimated number of children at-risk because some families file in one year but not another. To evaluate how results might have changed if CPL could have included 2019 and 2020 tax data, CPL analyzed how many at-risk families did not file in Tax Year 2018 or in Tax Year 2019. When accounting for 2018 data, CPL’s estimate of at-risk children falls to 470,000. However, CPL also found the demographic characteristics of the children and families at risk did not change when 2018 tax data was included. More information about the methodology is included in the appendix of the report.
The California Policy Lab creates data-driven insights for the public good. Our mission is to partner with California’s state and local governments to generate scientific evidence that solves California’s most urgent issues, including homelessness, poverty, criminal justice reform, and education inequality. We facilitate close working partnerships between policymakers and researchers at the University of California to help evaluate and improve public programs through empirical research and technical assistance.