Most families typically receive the child tax credit (CTC) as part of an annual tax refund after filing their tax return. The American Rescue Plan Act changed that temporarily. From July to December 2021, the Internal Revenue Service automatically delivered up to half the anticipated annual credit to the vast majority of families with children in monthly payments. The small share of families with children that did not receive the payments automatically could apply to receive them via an online portal. By December, the Treasury Department reported delivering payments to the families of 61 million children (see https://bit.ly/3O3gjch). Families who received the automatic payments could opt out of advanced payments starting in August, though available evidence suggests few families did so (see https://bit.ly/3zHgHsF). According to new data from the Urban Institute’s December 2021 Well-Being and Basic Needs Survey (WBNS; https://urbn.is/2ClcZqK), 45 percent of nonelderly adults living with children who received the advanced CTC payments reported they preferred receiving the credit as a monthly payment, 28 percent reported no preference in payment timing, and 27 percent preferred a single payment as part of a tax refund (figure 1). Respondents were generally more likely to prefer a monthly payment the lower their family income was, which is likely a reflection of greater instability in other income streams. About 54 percent of adults living with children under age 18 with family income at or below the federal poverty level (about $22,000 for a family of three in 2021) preferred a monthly payment, as did 57 percent of adults living with children with income between 100 and 200 percent of the federal poverty level. Just 29 percent of adults in the highest income group—those with incomes at least six times the poverty level—preferred monthly payments. An additional 35 percent in that group had no preference.
Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-DC license. (More information)
1 online resource (1 PDF file (2 unnumbered pages))