RECEIPT AND USAGE OF CHILD TAX CREDIT PAYMENTS

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

survey we cannot directly assess if differences across surveys are driven by sample characteristics, the timing of the surveys, or method of distribution.

INTRODUCTION

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

important anti-poverty tool, families with low or no earnings

did not qualify for the full credit, or any credit at all, blunting its

potential impact. The expanded Child Tax Credit is much larger

than the previous credit—worth $3,000 per child ages 6-17 and

$3,600 per child under 6—and is available to all low-income

families, even those with no earnings. In addition, half of this

year’s CTC is being paid out in monthly installments, from July

through December, essentially taking the form of a monthly

child allowance we see in many other Western industrialized

nations. Estimates suggest the expanded CTC could reduce child

poverty in the United States by 49%, a historic achievement.

Data collected from the U.S. Census Bureau’s Household Pulse

Survey showed a 30% decline in food insufficiency for adults

with children following the initial monthly payments

and a

43% decline in food insufficiency for low-income households

that received the initial payment.

Researchers from Columbia

University’s Center on Poverty and Social Policy estimate the

first two monthly payments cut the child poverty rate by nearly

30%, keeping 3.5 million children out of poverty.

However, while the potential anti-poverty impact of the expanded

CTC is extraordinary, we also know some families may face

obstacles to receiving their payments. Due to low earnings, many

low-income households do not traditionally file taxes, the primary

way in which families are enrolled to receive the credit. In addition,

tax-filing households may face other barriers to receiving their

payments, due to residential instability or limited access to banking

services.

To understand more about how the expanded CTC is impacting

families and inform strategies to expand access to the credit, we

partnered with Propel, the creators of Providers (formerly Fresh

EBT), a free mobile application that helps over 5 million families

manage their Supplemental Nutrition Assistance

RECEIPT AND USAGE OF CHILD TAX CREDIT

PAYMENTS AMONG LOW-INCOME FAMILIES:

WHAT WE KNOW

By Natasha Pilkauskas and Patrick Cooney

OCTOBER 2021

KEY FINDINGS

• Onl

y 2% of families with children reported not

having heard of the CTC in both the August and

September surveys.

• Sixty-six percent of parents reported they received

the CTC in July. This figure increased to 68% in

August.

• Few low-income families (1-2%) opted out

of monthly payments, choosing instead to receive

the credit as a lump sum in 2022, and

approximately 15% of parents reported not getting

it themselves but for reasons that do not raise

concerns about access (e.g., the other parent

claimed it or the credit is pending).

• Roughly 13% of parents were unsure why they

didn’t get the August payment or reported

confusion about eligibility, a figure that was down

from 19% for the July payment.

• Parents with lower levels of education and those

who are primarily Spanish speakers were most

likely to report not having received the July or

August payments.

• The vast majority of respondents who received a

CTC payment said they used the money to help pay

for bills (75%) and/or other basic living expenses

(like rent or food). Many reported using the money

on child-related expenses like school supplies and

children’s clothing.

• Ninety-four percent of families said the credit was

somewhat or very useful in helping them make

ends meet, and 92% of parents say the CTC should

continue post the pandemic.

Program (SNAP) benefits. This brief discusses findings from

two recent surveys with low-income families who use the

Providers application, many of whom are eligible for the CTC.

We found that while most respondents received the CTC and

used it to pay for essential household expenses, a substantial

share of CTC-eligible respondents did not receive their first

two monthly payments, suggesting more outreach and

supports are needed to achieve universal receipt.

THE STUDY

Every month, Propel invites users of the Providers application

to take a survey on a range of topics related to household

financial stability. Although the specific questions vary from

month to month, the Propel survey generally asks families

about employment, material hardship (i.e., ability to pay for

housing, food, and utilities), debt, and public benefit use.

We partnered with Propel to include a battery of questions

related to the Child Tax Credit on its monthly survey. This

brief discusses results from the August 1-13 and September

1-15 surveys, which asked about the July and August CTCs

respectively. More than 4,000 people took the August survey

and more than 6,000 took the September survey, and roughly

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

coresident children (we refer to these respondents as parents

but some may be non-parental primary caregivers). We focus

our discussion on the September survey but also highlight

changes between the August and September surveys.

Families with children in this study are highly economically

disadvantaged (see Figure 1 and Appendix Table 1 for details).

Approximately one-fifth reported having no household earnings

in the month of August and another 17% reported less than

$500 in household earnings. Twenty-one percent of parent

respondents do not have a high school degree and 40% have

no education beyond high school. Most of the respondents

are women (95%) and 28% are partnered. The parents in our

sample are also racially and ethnically diverse: 41% are non-

Hispanic Black, 32% non-Hispanic White, and 19% Hispanic.

CHILD TAX CREDIT RECEIPT

Respondents with coresident children under the age of 18 were

asked if they received a CTC payment in August (see Figure2).

The share who reported receiving the CTC was up slightly

in August (68%) from July (66%). The average credit amount

was $300-$600 (see Figure 3). In July, 86% of respondents

reported getting the first payment by direct deposit, but in

August this decreased to 73% (see Figure 4). This is likely

driven by an IRS error that resulted in a number of families

who received the credit via direct deposit in July receiving it by

check in August.

In both the August and September surveys,

only 2% of respondents reported not having heard of the CTC,

and another 3% were unsure if they had received the credit.

Although the credit is available to be paid out in monthly

installments, parents also have the option of getting the credit

as a lump sum when they file their 2021 taxes, but only 1-2%

reported taking that option.

FIGURE 1: HOUSEHOLD MONTHLY EARNINGS, AUGUST

FIGURE 2: RECEIPT OF THE CTC, JULY AND AUGUST

FIGURE 3: HOW MUCH MONEY DID YOU GET FROM THE CTC?

10%

15%

20%

25%

Prefer

not to say

$2,000+$1,000-1,999$500-999<$500No earnings

20% 17% 20% 25% 13% 4%

0% 20% 40% 60% 80% 100%

I haven’t heard of the

Child Tax Credit

I don’t knowOpted for lump sumNoYes

August

July

66% 28% 1%3% 2%

68% 25% 2%3% 2%

10%

15%

20%

25%

30%

35%

40%

AugustJuly

$901+$601-$900$301-$600$300 or less

37% 36% 19% 8%39% 35% 18% 8%

Note: Sample is restricted to households with children under the age of 18.

Note: Among respondents who reported having a child under the age of 18.

Note: Among respondents who said they got the CTC.

REASONS FOR NOT GETTING THE CTC

In order to better understand why some parents did not receive

their initial CTC payments, we also asked parents who did not

receive their payments why they did not receive them (see

Table 1). About 5% of all parents reported that the other parent

(or another relative) got the credit and another 4% of parents

said they had filed taxes but had not yet received the credit.

About 2% of parents reported a new custody arrangement,

a child that was born in 2021, or child support debt as the

reasons for not receiving the CTC. Another 2% reported

administrative errors (e.g., payments going to the wrong bank

account or wrong address, tax verification issue) as the reason

for not receiving their payments. Finally, 2% opted to receive

the credit as a lump sum. Thus, although only 68% reported

getting the August CTC payment, another roughly 15% of

respondents reported not getting the CTC for reasons that do

not suggest lack of access of or knowledge about the CTC, but

some other reason.

Together these findings suggest more

than 80% of respondents with a child received their second

payment, were waiting on their payment, or understood why

they had not received the payment.

However, 13% of parents did not know why they didn’t get the

credit or reported a lack of knowledge about the CTC and the

process by which they would receive the CTC. Eight percent

of caregivers said they did not know why they didn’t get the

CTC and another 5% reported they were not eligible (though

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

parents still do not understand how to claim the CTC, this

share of parents is down from 19% in the August survey. Thus,

it appears that low-income parents are becoming more aware

of the CTC and how to claim it.

The survey also asked if parents used the IRS non-filer portal

or update portal, two recent online tools deployed to expand

access to CTC payments. The non-filer portal is specifically

designed for low-income households that either have low or

no earnings and may not have previously been required to file

taxes. The update portal allows families who have filed taxes

to check on the status of their payments or update their bank

account information or mailing address.

Only 23% of respondents had used the non-filer portal, and

less than half of those who used it said they were successful in

processing a return.

Thirty-seven percent of parents reported

trying to use the update portal, but one-quarter of that group

reported being unable to log in. Indeed, to initially log in to the

update portal, users need to have an email address, receive a

log-in code to their phone, scan a photo ID, and take a picture

of themselves with a computer or smartphone, which is then

TABLE 1: WHY HAVEN'T YOU GOTTEN THE CTC?

PERCENT OF CAREGIVERS

JULY AUGUST

I do not know 11 8

Other parent/relative claimed the credit 5 5

Not eligible 4 4

Filed taxes/applied but have not yet

received/pending/amended

4 4

I don't know I needed to submit forms/tax

return to receive it

3 2

I don't file taxes/haven't filed 1 0

Went to the wrong bank account 1 1

Child was born in 2021 0 1

It was taken to pay child support 0 0

I opted not to get it because I'm worried

about losing other benefits

0 0

Other person claimed/another falsely

claiming

0 0

New custody agreement/custody issue 0 0

Issue with tax system/other tax problem

(audit, verification)

- 1

Address wrong/changed - 1

Other 1 1

Note: Only asked of those who said they did not get the CTC. Respondents

may select more than one option. In July, 518 respondents answered

this question out of 1,877 caregivers. In September, 871 respondents

answered this question out of 3,511 caregivers. The percents reported

here are share of all caregivers.

FIGURE 4: HOW DID YOU RECEIVE THE CTC PAYMENT?

JULY AND AUGUST

20%

40%

60%

80%

100%

AugustJuly

CheckDirect deposit

73%86%

14%

27%

Note: Among respondents who said they got the CTC.

run through facial recognition software. And while the non-

filer portal is less burdensome than a full tax return, users

unfamiliar with the tax system may get tripped up by terms

like “adjusted gross income.” These survey findings suggest

usability and possibly awareness of these portals may be a

barrier to getting the CTC. However, it is worth noting that

that use of both portals was slightly higher in the September

survey than the August survey.

WHO WAS LEAST LIKELY TO GET THE CTC?

To better understand which low-income families are not getting

the CTC, we ran a series of analyses looking at differences

across different demographic groups. In Figure 5, we show the

share of parents who report receiving each CTC payment by

race and ethnicity, education level, and survey language.

A few findings stand out. First, the share of parents who

report getting the CTC varies by race and ethnicity. Although

Hispanic parents were far less likely to have received the July

CTC payment, by August, Hispanic families were receiving

the CTC at similar rates to White families and those of other

racial and ethnic backgrounds. The improvement in the rate of

receipt among Hispanic households may in part be driven by

an IRS glitch that resulted in some immigrant-led households

who file taxes with an ITIN not receiving their July payment.

The IRS corrected the glitch and provided affected households

with their July payment in August.

Interestingly, we also find

the share of Black families who received the August CTC was

5-6 percentage points higher than that of any other racial or

ethnic group.

Second, although we saw an increase in the rate of receipt

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

in Spanish, here we see a large difference in CTC receipt by

dominant language. In July, only 38% of Spanish language

respondents reporting getting the CTC as compared to 67% of

English survey respondents. By August, the gap in receipt had

reduced significantly but remained: 54% of Spanish language

respondents received the CTC compared with 69% of English

language respondents. The improved receipt among Spanish

language respondents may in part be driven by the ITIN

correction, but a gap remains nonetheless.

Some of the difference in receipt by primary language may be

driven by differences in tax filing: 74% of Spanish language

survey takers reported filing 2020 taxes as compared with

79% of English language survey takers. Five percent of

Spanish language survey takers also reported not having

heard of the CTC, compared with 2% of English survey takers.

FIGURE 5: PERCENT WHO RECEIVED THE CTC BY DEMOGRAPHIC GROUPS

0% 10% 20% 30% 40% 50%

60%

70% 80%

Associate +

Some college

High School

<High school

Spanish survey

English survey

Other

(Asian, NA, PI,

Multiracial)

Hispanic

White

Black

67%

69%

56%

63%

67%

39%

56%

67%

68%

73%

71%

66%

65%

69%

54%

60%

68%

71%

73%

AugustJuly

However, even these differences in tax filing and knowledge of

the CTC are unlikely to fully account for the lower share of CTC

receipt among Spanish language respondents, who may be

facing additional constraints. These findings point to a need to

direct more outreach to Spanish language households.

Lastly, we examined differences in receipt of the CTC by

education. We find an education gradient, in which those

parents with greater education are the households most

likely to have received the August CTC payment. When we

look at differences between July and August CTC receipt by

education, we find that although those without a high school

degree continue to have the lowest recipiency rate, the rate

improved most for this group between July (56%) and August

(60%). Some of the differences by education may be driven by

differences in tax filing: 72% of parents with less than a high

school degree filed 2020 taxes, compared with 80% of those

with a high school degree, 80% of those with some college and

87% of those with an associate degree or more. Differences in

receipt do not appear to be driven by awareness of the CTC as

those without high school degrees were only somewhat less

aware of the CTC (3%) than those with more education (2%).

HOW DID YOU USE THE CHILD TAX CREDIT AND

WAS IT USEFUL IN MAKING ENDS MEET?

We asked parents an open-ended question about how they

used the CTC payment (see Table 2). The vast majority reported

using the money for basic living expenses like paying bills

(75%), paying rent/mortgage (9%), paying off debt (4%) and

buying food (7%). Many parents also reported using the money

for expenses that are directly child-related. Twenty-four

percent reported using the money for school supplies/school

clothes or uniforms. Another 4% reported buying children’s

clothing, 8% bought other child necessities like diapers or

“things my child needs,” and 6% said they used the money for

child care. Relatively few parents (2%) reported putting the

money into a savings account.

Spending patterns for the July

and August CTCs were quite similar, although more parents

reported using the August CTC for school-related expenses.

In addition to asking parents how they spent the money, we

asked parents how useful they found the payments in helping

them make ends meet. Overwhelmingly, parents report that

the CTC was useful in helping them to make ends meet, with

94% of respondents reporting it was very or somewhat useful

(see Figure 6).

We also asked in another open-ended question about how

the CTC affected their family or household. The majority of

respondents reported positive sentiments—that the CTC was

helpful or a blessing. A number of respondents reported

being able to “catch up” or “make ends meet.” However, 16%

reported the initial CTC payment did not provide enough help.

TABLE 2: HOW DID YOU USE THE CTC?

PERCENT OF CAREGIVERS

WHO RECEIVED CTC

JULY AUGUST

BILLS AND LIVING EXPENSES

Paid bills 72 75

Paid rent/mortgage/for housing 9 9

Paid of loans/debts 5 4

Bought food 5 7

Bought household necessities (toiletries,

cleaning supplies etc)

4 5

Paid for gas or car expenses 2 5

CHILD-RELATED EXPENSES

Bought school supplies 11 14

Bought school clothes/uniforms 8 10

Bought child necessities (diapers, wipes, other) 8 8

Bought child clothes 6 4

Paid for child care 4 6

OTHER

Put money in savings 2 2

Other 4 4

Clothes (not specified kid/adult) 2

N 1,151 2,208

Note: Categories are not mutually exclusive (people could select multiple

responses). Sample is restricted to parents who received the CTC and

who provided a response. Percents may sum to more than 100%.

FIGURE 6: HOW USEFUL HAS THE CTC BEEN TO

HELPING YOU MAKE ENDS MEET?

10%

20%

30%

40%

50%

60%

70%

80%

Not very/

Not at all useful

Neither useful

nor unuseful

Somewhat

useful

Very useful

70% 24% 2% 4%

Note: Among respondents who said they got the CTC.

This could be a function of the fact that those with very low

incomes may still struggle to afford basic expenses despite

these additional payments.

Lastly, we asked parents to tell us how important it will be

for the government to continue the expanded CTC once the

coronavirus pandemic is over (see Figure 7). As might be

expected given the general positive sentiments that parents

expressed about the CTC, the majority (92%) report that it will

be important to continue the CTC in the future.

CONCLUSION

This

study offers an initial glimpse into the extent to which

the expanded Child Tax Credit is reaching and improving

the welfare of low-income families. The majority of families

in our study received the July and August CTC payments

and found them to be a great help. However, some families

continue to report confusion around the process. Parents

with limited English proficiency, as well as those with less

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.

And many parents report difficulty accessing the

online tools meant to facilitate the process of registering

with the IRS. These findings suggest policymakers should

continue to pursue strategies that increase awareness of and

support for accessing the CTC among those who are currently

not receiving their payments. Future surveys will help us

understand if more low-income families learn about and

receive the CTC and how spending patterns change over time.

ABOUT THE AUTHORS

Natasha Pilkauskas is an associate professor of public policy

at the Gerald R. Ford School of Public Policy at the University

of Michigan.

Patrick Cooney is assistant director of policy impact at U-M’s

Poverty Solutions, a university-wide presidential initiative that

aims to find new ways to prevent and alleviate poverty through

action-based research.

The authors would like to acknowledge Propel for its

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.

FIGURE 7: HOW IMPORTANT IS IT FOR POLICYMAKERS

TO CONTINUE GIVING FAMILIES THE CTC ONCE THE

CORONAVIRUS PANDEMIC IS OVER?

10%

20%

30%

40%

50%

60%

70%

80%

Not very/

not at all important

Neither important

nor unimportant

Somewhat

important

Very

important

78% 14% 6% 2%

Note: Sample is restricted to respondents who were familiar with the CTC and

who had children under 18

ENDNOTES

1 Sophie Collyer, Christopher Wimer, and David Harris, “Earnings

Requirements, Benefit Values, and Child Poverty under the Child Tax

Credit,” Columbia University Center on Poverty and Social Policy 3, No. 3

(March 2019).

2 Claire Zippel, “After Child Tax Credit Payments Begin, Many More

Families Have Enough to Eat,” Center on Budget and Policy Priorities,

August 30, 2021.

3 Zachary Parolin, Elizabeth Ananat, Sophie Collyer, Megan Curran, and

Christopher Wimer, “The Initial Effects of the Expanded Child Tax Credit

on Material Hardship,” Columbia University Center on Poverty and Social

Policy, Poverty and Social Policy Working Paper, August 30, 2021.

4 Zachary Parolin and Megan A. Curran, “Expanded Child Tax Credit Leads

to Further Decline in Child Poverty in August 2021,” Columbia University

Center on Poverty and Social Policy, Poverty and Social Policy Fact Sheet,

September 24, 2021. Researchers from Columbia have been generating

monthly poverty rates since the onset of the pandemic.

5 https://www.irs.gov/newsroom/irs-families-now-receiving-august-child-

tax-credit-payments-still-time-for-low-income-families-to-sign-up

6 This estimate is not precise as respondents could pick multiple options

for why they did not get the CTC.

7 Though it is often referred to as a non-filer portal, those who use it are

filing a simplified tax return

8 31% of respondents reported using the update portal and 21% used the

non-filer portal in the August survey.

9 https://www.washingtonpost.com/business/2021/07/30/immigrant-

parents-child-tax-credit-delays/

10 An analysis of tax filing shows that 81% of Black parents, 80% of White

parents, and 77% of Hispanic parents had filed 2020 taxes. Thus, tax

filing cannot explain the higher rate of receipt among Black families.

11 Far fewer respondents in our survey reported using the CTC on food

expenses as compared with the nationally representative Census

Household Pulse Survey. Unlike the Census Pulse survey which asked

respondents to indicate how they used the CTC from a set of choices,

we asked an open-ended question. Additionally, 84% of parents in our

sample are currently receiving SNAP benefits; thus, they may have had

less need to use their CTC on food expenditures.

12 Parolin et al., “The Initial Effects”

APPENDIX

APPENDIX TABLE 1: CHARACTERISTICS OF FAMILIES IN THE STUDY SAMPLE

JULY AUGUST

AGE

18-24 7% 8%

25-34 36% 42%

35-44 38% 37%

45-54 14% 10%

55+ 6% 4%

HOUSEHOLD STRUCTURE

Household size 4.24 4.39

Partner/spouse 31 28

Extended family (parents, siblings, aunts/uncles) 12 13

Other (friends, roommates) 4 4

NUMBER OF KIDS 2.6 2.69

Under 6 0.91 0.98

Ages 6-18 1.65 1.71

GENDER

Woman 94% 95%

GEOGRAPHY

Rural 33% 32%

Urban 45% 47%

Suburban 22% 21%

JULY AUGUST

RACE/ETHNICITY

Black 32% 41%

White 39% 32%

Hispanic 20% 19%

Other 10% 8%

EDUCATION

<High school 8% 6%

Some high school 16% 15%

High school 37% 40%

Some college 28% 28%

Associate degree 8% 7%

College + 4% 3%

HOUSEHOLD MONTHLY EARNINGS

No earnings 22% 20%

<$500 15% 17%

$500-999 18% 20%

$1,000-1,999 26% 25%

$2,000+ 14% 13%

Prefer not to say 5% 4%

Note: Sample is restricted to households with children under the age of 18.