More than 36,000 Colorado children could lose out on a historic expansion of the federal Child Tax Credit because their families don’t file income taxes with the IRS.
The tax credit, which is temporarily expanded this year through funding from the federal coronavirus stimulus package, known as the American Rescue Plan, is being hailed as a historic anti-poverty measure that will deliver relief to families amid a devastating coronavirus pandemic.
But the state, school districts and advocates are concerned some of Colorado’s most vulnerable families won’t get the benefit because they aren’t signed up to automatically get payments through the IRS or are facing other barriers. And while there is a sense of urgency to get people signed up, plans on how to reach families are still coming together.
It’s a Catch-22, said Andy Burns, executive director of intervention and student support services for Pueblo School District 60, a district of more than 15,000 students.
“The advance payment is a great opportunity to help our families in need,” Burns said. “Unfortunately, those that are in most need because they may not have filed taxes in the previous year may not be automatically enrolled.”
The expanded tax credit gives parents of children up to age 17 between $3,000 and $3,600 in monthly installments if they are a single filer making less than $112,500, or joint filers making less than $150,000. The credit decreases by $50 for every $1,000 in income parents make over that threshold.
Families began receiving advance payments from the Child Tax Credit last month, either through the mail as a check or direct deposit to a bank account. The U.S. Treasury Department estimates that most eligible children and families will get their monthly payments automatically, because those families filed their income taxes with the IRS in 2019 or 2020, or used the IRS website to get their stimulus checks.
But a June 29 report from the Center for Budget and Policy Priorities estimates nearly 4 million children nationwide and more than 36,000 in Colorado won’t get those payments automatically, based on an analysis of children who are reported on tax forms as receiving health insurance but don’t otherwise show up on tax returns.
That includes low-income families that don’t make enough to file with the IRS, people who have been out of work for long periods (including parents with disabilities) and brand new parents whose children won’t appear on their 2020 returns. The group also includes parents living in the country illegally who have U.S. citizen children but may be reluctant to apply for the government benefit.
The report called on state and local government agencies and community organizations to ramp up outreach and provide hands-on assistance, noting that many of those families are already engaged with benefit programs administered by state and local governments such as food stamps, Temporary Assistance for Needy Families and Medicaid.
With kids headed back to school and many families still trying to recover from the economic blows of the pandemic, advocates say it’s important to get families signed up as soon as possible.
“It definitely helps them in their financial stability, whether that’s because they’re unemployed or they’re at risk of losing their shelter or their home,” said Patrick Walton, director of Tax Help Colorado at Mile High United Way.
The state is “at the very beginning phases” of forming a coordinated effort across agencies to help get more Coloradans signed up for the benefit, Conor Cahill, a spokesman for Gov. Jared Polis, said in a written statement.
“This is a top priority,” Cahill said.
Polis’ office is working to reach families who qualify for the benefit in partnership with the Colorado Department of Public Health and Environment, the Department of Labor and Employment, the Department of Education, the Department of Human Services, the Office of Economic Development, and the Colorado Department of Health Care Policy and Finance, Cahill said.
The office of U.S. Sen. Michael Bennet, the Colorado Democrat who championed the expansion of the Child Tax Credit this year, is also working with Polis’ staff on a coordinated outreach plan, said Kate Oehl, a spokesperson for Bennet’s office.
“We’re still trying to navigate how to reach these families in a meaningful way,” Oehl said. “We’re learning as we go here as this gets rolled out in real time.”
Many families need language assistance, have limited internet access or are wary of applying for government assistance, Walton said. Tax Help Colorado and other groups said they are still figuring out outreach plans.
In the meantime, many small organizations are doing what they can. The Denver Asset Building Coalition, or DABC, a volunteer program that provides tax help year-round to people with low incomes, held an event with Bennet’s office to help people sign up for the Child Tax Credit and file their annual taxes. Only three people showed up, executive director Wendy Ferrell said.
“We don’t really have an advertising budget, we are real bare-bones,” said Ferrell, who emailed press releases in English and Spanish to news outlets. “I’m a tax lawyer. I don’t know how to get the word out.”
DABC can also help people set up bank accounts, Ferrell said, noting that many low-income individuals may not have one to receive the payments. With backlogs at the IRS, a lost check could take a long time to replace, she said.
In working to raise awareness and connect people to tax filing services, CDPHE also has distributed flyers and social media materials about the Child Tax Credit in English and Spanish, which specifically address concerns about how immigration status can affect eligibility and whether receiving the tax credit will reduce other government benefits, said Isabel Dickson, an economic mobility specialist for CDPHE.
“We want to make sure that immigrants and refugee families know that the Child Tax Credit payments do not affect or reduce other benefits and are not counted as income,” Dickson said.
Many low-income families will need to hear from community groups they trust, especially immigrant communities with concerns that accessing government benefits might expose their immigration status or subject them to stigma surrounding government aid, said Jessica Martinez Vasquez, communications director for the racial and economic justice group Colorado People’s Alliance.
Getting the payments on time is especially urgent for immigrants in the country illegally who aren’t eligible for other types of assistance, many of whom were essential workers during the pandemic, said Martinez Vasquez.
“Our communities of color were hit the hardest during COVID, and at the same time, have not been able to recover at the rate of other communities,” said Martinez Vasquez.
While other benefits aimed at low-income families, like the Earned Income Tax Credit, require a Social Security number, the Child Tax Credit is available to parents whose children have social security numbers and who file income taxes with the IRS using an individual taxpayer identification number, or ITIN.
Rolling out coronavirus stimulus payments and the Child Tax Credit has been a massive undertaking for the IRS. Martinez Vasquez said the group has heard from parents who file with ITINs and have been unable to sign up. CBS News also reported this week that an IRS glitch resulted in families with mixed-immigration status not receiving their July payments.
“We know the number is around 36,000 children who may miss out, but the reality is there are so many children included in that because of…information not being available, because of all the delays,” Martinez Vasquez said.
At Pueblo School District 60, where more than three-quarters of students qualify for free or reduced price lunch — a federal indicator of poverty — during the last school year, the district has compiled resources to share with families about the Child Tax Credit as the school year gets underway. That work will ramp up in mid-August as staff members return to school buildings, Burns said.
Many staff members already have strong relationships with families, he said, and outreach related to the monthly payments will provide the district with “another touchpoint to communicate with our families and really show that we’re here to support their families and their students’ success.”
It’s an important job because of how much families — and kids — stand to gain, particularly as parents can use money from the benefit to cover critical needs, such as child care.
“We see a direct tie-in to student success and student engagement because if families have the resources to provide for some of those daycare programs or other programs,” Burns said, “then it will help to ensure that our students can be as successful as possible.”
