Why 2.3 million US children could miss out on expanded tax credit

When Joe Biden expanded the US Child Tax Credit (CTC) this summer, it immediately slashed America's high child poverty rate by a third. Yet while about 67 million children are eligible for the benefit, many of the most vulnerable families are still missing out.

The amount parents could claim jumped from $2,000 (£1,464) per child annually, to up to $3,600.

The benefits are also paid out monthly, rather than just when families file their annual taxes, meaning the poorest get help sooner.

However, you have to be registered with the Internal Revenue Service, the US tax agency, to claim the help. And up to 2.3 million families are not, according to the government.

What's more, experts say these families are likely to be the ones most in need of help.

Kimberly (not her real name) from Oxon Hill, Maryland is eligible to claim the tax credit for her one-year-old daughter, but hasn't received a single payment since July.

The former waitress, 22, hasn't worked since the start of the pandemic and relies on her husband, a painter, for support. They are struggling to pay their rent and healthcare bills.

"It's really unfair," she says, pointing out she wants to use the money to buy things like nappies and baby milk.

"So many parents are already getting this money yet we all have the same needs."

An undocumented immigrant from El Salvador, Kimberly can claim the tax credit because her daughter was born in America. But she needed to have a special tax number called an "Individual Taxpayer Identification Number" (ITIN) in order to get the money.

She applied for one back in April, but it took the IRS five months to process due to Covid-related backlogs.

Kimberly has now missed out on the first four CTC payments, which should have been paid automatically into her bank account. What's more, she says the IRS still can't tell her when she'll start getting the cash.

An IRS spokesman told the BBC it could not comment on individual taxpayers, but added: "For eligible people who don't receive advance Child Tax Credit payments this year for any reason, they will be able to claim it when they file their 2021 tax return next year."

In the US, children are considered poor if they live in a household with an annual income below the Federal Poverty Line of $25,701 (or $2,141.75 per month) for a family of four. Often they miss out on vital basics like having a balanced diet, a warm enough home, or the right clothes for school.

Elaine Maag of the Urban Institute, an economic think tank in Washington DC, says the CTC scheme has been a "tremendous success" overall. All social security programmes have "imperfect participation", she adds.

Yet she says it is typically the poorest in America who are not registered in the tax system - and these are the ones missing out on the CTC.

Alongside immigrants facing ITIN issues, those missing out include parents who have never filed taxes due to having a low or no income, new mothers whose children don't yet have social security numbers, and those who have simply have never heard of the benefits.

In addition, some eligible immigrant families don't claim because they wrongly think it might jeopardise their right to stay in America.

The Biden administration is aware of the problem and has launched a sign-up portal with the IRS to make it easier for so called "non-filers" to access the CTC.

It's also running awareness campaigns and making the information available in Spanish after initially only doing so in English. Research shows households in which Spanish is the dominant language are less likely to have received a CTC payment, or to have even heard about the tax credit.

Yet Tyler Hill at charity GiveDirectly says the administration needs to go much further.

"These families are often the most marginalised and can't be reached by conventional advertising. They are not reading the president's Twitter," he says.

He thinks people not in the tax system face too much burden when applying for the benefit, which puts some off.

"They have to find the White House's webpage, click through three external sites before creating an account, file with the IRS, and set up a direct deposit," he says. "That's a high bar given that only half of non-filers own a computer, nearly a quarter don't have a bank account, and many lack a permanent address."

He says developing African and Asian countries can disburse aid to the poorest much more effectively using simple text message systems, or easy-to-use apps. He'd like the Biden administration to try something similar.

Pablo Blank, head of tax at Casa, an immigrant advocacy organisation in Maryland, thinks officials should invest more in helping immigrant communities who disproportionately miss out on the CTC. Faster processing of ITINs would be a start, he says, noting that many others are in the same boat as Kimberly.

A US Treasury spokeswoman said that US government departments from education to housing were working together to tackle the problem. Uptake of the CTC is also increasing each month and 60 million children will successfully benefit from the fourth advance payment in October.

The IRS said it was "taking every action to minimise" ITIN processing delays, but was still trying to clear applications filed in late May.

Congress has only expanded the Child Tax Credit for a year under the American Rescue Plan, which was designed to help the US get through lockdown. But the Biden administration wants to see it extended until 2025.

Despite the political rancour on Capitol Hill, Ms Maag is quietly confident the benefit won't be reversed.

"The Child Tax Credit has been expanded many times since it was introduced in 1997 and has never gone back to being smaller even though some of the increases were scheduled to be temporary," she says. "If history is a predictor of the future we're in good hands."