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Over 1 Million Ineligible Families Received Child Tax Credit, Eligible Families Left Out

Over 1 Million Ineligible Families Received Child Tax Credit, Eligible Families Left Out

Over 1 million ineligible families received benefits from the expanded child tax credit, while thousands of eligible families got nothing.

There has recent been a mounting effort, led by key Congressional Democrats, to extend President Biden's enhanced child tax credit (CTC), which played a role in reducing child poverty nationwide.

Per a recent report from the Census Bureau, the nationwide poverty rate fell to 7.8% in 2021, the lowest level on record. This was largely due to pandemic-related stimulus payments, including the expanded CTC. 

The Census Bureau's data indicates that child poverty fell by approximately half, with the child tax credit playing a major role. 

Business Insider spoke to Chuck Marr, vice president of federal tax policy at the Center on Budget and Policy Priorities. Marr said, "This is what policy success looks like. This was a historic achievement to reduce child poverty by a record amount driven by the expansion of the child tax credit."

Now, however, it has emerged that millions of eligible families did not receive the child tax credit funds they were owed, while over 1 million ineligible parties were recipients of government money.

Per CNN:

The Internal Revenue Service failed to send $3.7 billion in monthly child tax credit payments to 4.1 million eligible taxpayers last year, according to an audit released Tuesday by the Treasury Inspector General for Tax Administration.

At the same time, the IRS sent more than $1.1 billion to 1.5 million taxpayers who should not have received the monthly installments, the audit found.

The news outlet noted that the IRS had just four months to set up the system to deliver payments to parents and caregivers, with the inspector general's office noting that this was a "significant undertaking" in a short period of time. 

As part of the audit, the inspector general’s office made recommendations to the IRS, including taking action to prevent unqualified taxpayers from receiving future payments and informing taxpayers that their child tax credit payments may have been sent to other accounts in their name.

According to CNN, the IRS agreed with these suggestions. 

CNBC also weighed in on the fact that millions of eligible people did not claim the child tax credit, citing complex claiming procedures and lack of clarity about qualifications as major reasons for taxpayers' confusion.

The Washington D.C.-based Bipartisan Policy Center recently issued a report that recommended " host of potential solutions, including developing an office at the IRS to focus on administering social benefit programs and increasing outreach about the credits."

Retired IRS commissioner John Koskinen shared that he believes additional support also needs to be made available for American tax filers:

“If you’re a low-income taxpayer, a little concerned about whether you’re doing this right and you want to call somebody to get help, the last couple of years it’s been impossible to get somebody at the IRS."

At this time, an agreement to extend the expanded child tax credit has not yet been reached. 

It is worth noting that there has also been Republican support for some type of extension. In July, Senator Mitt Romney (R-UT) was joined by two other Senators in introducing the Family Security Act 2.0. 

You can learn more about the Child Tax Credit on its official White House information page.

What do you think about this Child Tax Credit news?

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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