Child poverty dropped significantly last year following the expansion of the child tax credit. The impact of this federal child tax credit would have been better had all eligible families gotten this credit.
A recent audit by the Treasury Inspector General for the Tax Administration found that millions of eligible families didn’t receive the monthly Federal child tax credit.
Millions Missed This Federal Child Tax Credit
On Tuesday, an audit report from the Treasury Inspector General for the Tax Administration noted that the Internal Revenue Service (IRS) failed to send $3.7 billion in monthly child tax credits to about 4.1 million eligible taxpayers last year.
Not only did the agency fail to send payments to eligible families, but it also sent payments to millions of ineligible taxpayers. About 1.5 million taxpayers, who weren’t eligible for this federal child tax credit, got more than $1.1 billion in the form of the child tax credit, the audit report found.
Further, the report also found instances of errors related to incorrect bank account information. Despite the errors, the expanded child tax credit proved to be a lifeline for millions of families. As per the data from the U.S. Census Bureau, the expanded credit helped to reduce child poverty by over 40% between 2020 and 2021.
The agency sent about 217 million payments totaling $93.5 billion as of December 2021. The audit report covered about 179 million payments that the agency sent between July and November 2021, totaling over $76.7 billion.
Expanded Child Tax Credit: Issues Were Expected
Last year’s expanded child tax credit was a temporary enhancement payment, and it was part of the $1.9 trillion American Rescue Plan Act, which was approved in March 2021. The expanded child tax credit raised the credit amount up to $3,600 for a child up to age 6, and up to $3,000 for a child aged 6 through 17.
Moreover, the credit was made fully refundable to ensure it covered more low-income parents. As well, half of the credit amount was sent in monthly installments from July through December, and parents were allowed to claim the other half at the time of filing their 2021 taxes this year.
Despite such significant changes to the CTC, the IRS had about four months to put the system in place to send out the payments. Thus, some mistakes were expected. Even the inspector general’s office admitted that it was a “significant undertaking” to put the monthly payment system in place in such a short period of time.
If you are one of those who hasn’t yet received the federal child tax credit despite being eligible, the good news is that you may still be able to claim it.
You can visit GetCTC.org, which is a website from Code for America. This website offers a simple form that people who don’t typically file tax returns can use to claim their child tax credit and other stimulus payments. The online form is available through Nov. 15.
This article originally appeared on ValueWalk
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
