Few tax policies are conditional on providing for the needs of children or ensuring that refunds are distributed based on the number of children in a home. It’s been a difficult time to be a parent and just this past November, 44% of families in Virginia indicated they had a hard time affording their typical household expenses. It’s heartbreaking to hear from a parent who is stressed about keeping food on the table or a roof over their heads. And it’s detrimental to our society when we can’t provide children economic security, impacting our children’s brains and their growth and development.
It’s time for Virginia to create a tax credit for parents and guardians who have children under 18 in their homes. This year Senator Jennifer McClellan, Senator Adam Ebbin and Delegate Kathy Tran have filed a Child Tax Credit (HB2205/SB1324) that would be available to all households in Virginia who claim dependents on their taxes and earn under $100,000 per year. The household would be eligible for $500 per child in a refund of their tax dollars.
Virginia families are battling inflation and continued economic uncertainty. We are reaching the end of COVID relief, yet for many families that “end” does not bring certainty or stability in their economic health or their children’s physical health and well-being.
But we have a tool that we know works. The expanded Child Tax Credit provided as COVID relief changed the trajectory of childhood poverty. The expanded Child Tax Credit helped to bring childhood poverty to a record low. Virginia’s supplemental poverty measure declined to 9% in 2021. Families receiving the credit used it to help put food on the table and pay their basic utilities.
More than half of families survey reported using the expanded Child Tax Credit for food, followed by a third who used the money to pay bills.
A refund of $500 per child can help afford a month of groceries, a thousand diapers or a security deposit on a new apartment.
As lawmakers weigh tax refund proposals, a Child Tax Credit should rise to the top because it can provide resources to families at a time in children’s lives when they need it most. Researchers have identified how the stresses of living in poverty can impact the hardwire of children’s brains and create future mental health concerns and academic challenges. As lawmakers consider various ways schools and communities can help reverse the impact of the pandemic on children, providing tax relief back to their parents is a clear win. In 2022 several states enacted refundable Child Tax Credits or one-time relief to prioritize families and impact this life course including Vermont and New Mexico. Virginia is in a fortunate position to have strong tax revenues again this year. The commonwealth should create a Child Tax Credit to support strong families.
Virginia reached an important policy milestone this year — the General Assembly approved a state refund for a portion of the Earned Income Tax Credit (EITC) available to low-income working families. For the 2023 tax filings, families who qualify for the EITC will receive the refund on their federal taxes. At the state level, Virginia will give an additional refund equal to 15% of the federal refund.
Tax refunds help families experiencing material hardship or poverty meet many of their basic needs and can be used as needed to pay off debts, pay rent or put food on the table. These refunds are especially impactful during times of inflation and when COVID response policies are starting to come to an end.
Later this summer or early this fall families will also receive a one-time tax relief payment due to larger than expected revenue surpluses in the state budget. People with taxable income will receive a refund, but those who earn too little to owe taxes will not. And unlike the EITC, family size will not be factored into the payment—only marital status. These one-time refund plans fail to consider the additional expenses of feeding a larger family or child care needs for families with young children.
What Could Be Next for Families?
While this year marks an important step to provide more families with tax relief, it is helpful to take a step back and see where other states have built policies to support families. As most other states have wrapped up their legislative activity for the year, we can share how other states have designed tax refund policies that specifically support children and families.
Recently ten states* have introduced legislation to create state-level child tax credits. Vermont is the most recent state to approve a child tax credit for families with children under five earning less than $125,000 per year. Vermont now joins the nine other states who have a child tax credit already in place for families (California, Colorado, Idaho, Maine, Maryland, Massachusetts, New Mexico, New York and Oklahoma).
These states have provided a model that Virginia should consider. These are states who are governed by both Republicans and Democrats, but they have united behind state refunds to support families. Targeting refunds, in conjunction with the refundable EITC, impacts families’ economic security and lowers their level of hardship. Economic hardship is a main reason that children and parents experience trauma, depression, emotional distress. These negative outcomes mean economic hardship also puts children at risk of entering foster care. Additional state refunds can reduce these negative outcomes. Research on the federal child tax credit found that families used the additional funds to meet basic needs for food, utilities and clothing.
By targeting tax credits to low-income families, these refunds can also reduce inequity. Black and Brown families make up the lowest income families in Virginia and experience disproportionate economic hardship. Choices to expand the EITC and to target Child Tax Credit can provide more financial resources to the families who have often been left behind.
In the coming months, we anticipate waves of financial uncertainty for families dealing with higher gas prices, increasing rents, and universal free school meals coming to an end. If lawmakers provide additional savings and stability to communities facing uncertainty, our families would feel better about providing for their families and their children would feel more secure.
We all want Virginia to be the best place to raise children and provide opportunities for them to grow up, but our tax policy is not in line with that belief. It’s time to join the other states in prioritizing children and families and offer targeted tax relief to families.
*Connecticut, Hawaii, Illinois, Iowa, Kansas, Michigan, Missouri, Oregon, Vermont and West Virginia
As Congress is poised to act on the social infrastructure agenda known as Build Back Better, we wanted to give a better sense of the transformational impact this legislation will have on kids and families. The goal of Build Back Better is to address the inequities that existed before the pandemic and have been exacerbated by the pandemic. The policies are intentionally designed to target economically disadvantaged children, children of color, and women to provide the resources that have previously been unavailable or unaffordable. These policies will also deliver immediate relief to families by continuing the monthly Child Tax Credit payment for the lowest income families and improves conditions in the long-term by providing more equitable access to child care and prenatal care.
UPDATE 11.5.21- House of Representatives Vote
Today the House of Representatives will vote on the Bipartisan Infrastructure package and the Build Back Better Act. The Senate has already approved the Infrastructure bill so it will head to the President. The Senate has been given a deadline to approve Build Back Better before Thanksgiving and the contents could change to reach an agreement between the House and Senate. Particularly at risk in the Senate are the paid family leave provisions.
Our hope for Build Back Better was that it would provide the three things we heard from families throughout the pandemic that they needed most—child care assistance, flexible cash assistance through the Child Tax Credit, and paid family medical leave. House negotiations and incredible advocates have made it possible to put four weeks of paid family leave back into the bill. It will be critical to continue to speak up to ensure it stays in the Senate version.
There are many provisions of the Build Back Better plan. Here are some key highlights for children and families:
Extension of the enhanced Child Tax Credit for one year:
The new framework keeps the higher payment amounts and fully refundable payments in place for another year. This will allow for the families who previously earned too little to qualify for the benefit to receive assistance and for “little DREAMers” to qualify. This expansion will impact Black and Latinx children significantly as more than half of the children who were previously excluded for earning too little were children of color. The flexible cash assistance provided through the Child Tax Credit will continue to help families cover basic necessities like food and child care.
Transformational investments to make child care and preschool more affordable and accessible:
Congress’s $400 billion investment in child care and preschool will dramatically impact a system that is struggling to recover from the impact of the pandemic and help get mothers back into the workforce. The comprehensive proposal addresses the child care supply and affordability angle from all sides—it reduces parent costs to no more than 7% of income, provides resources to increase early educators compensation, and builds on a mixed-delivery system of public, private, and Head Start programs. With funding specifically for 3’s & 4’s in preschool, this significant investment provides an opportunity to improve the child care assistance policies around the needs of infants and toddlers.
Child and maternal health improvements to address racial disparities:
While Virginia lawmakers have already approved the extension of Medicaid eligibility for 12 months postpartum, Build Back Better makes this extension a requirement for states. It also includes all of the provision of the Black Maternal Health Momnibus package, which would support training and diversification of the perinatal workforce, maternal health quality improvements, better data systems to track and identify causes of maternal mortality, investments in historically Black colleges and universities to conduct research into maternal health disparities, and grants to support implicit bias training for frontline health care professionals.
For children, the legislation would require Virginia to provide 12 months of continuous eligibility for Medicaid and FAMIS. Currently about 5% of children enrolled in Medicaid/FAMIS lose their coverage during the year. It also makes the federal funding for the Children’s Health Insurance Program (known as FAMIS in VA) permanent.
Improvements to nutrition access will keep children from going hungry:
Build Back better would provide better nutrition access to students by expanding the Summer EBT program allowing eligible families to receive additional assistance to purchase meals during the summer months or while schools are closed. The proposal also strengthens the Community Eligibility Provision that allows schools to opt in to provide free meals to the entire school enrollment.
House version provides four weeks of paid family medical leave:
Parents need paid family medical leave after the birth of their children, when kids are sick, to care for other families and to provide for their own health. The U.S. is alone among wealthy nations for not providing a paid family leave program. The House proposal would create a program to offer every worker access to a national paid family medical leave program. Creating a universal program will impact more parents of color working in jobs who currently do not offer paid leave. And importantly, it will give more new parents time off to care for their newborns and for mothers to recover from giving birth.
More to come…
While more details are forthcoming, the bill also includes investments in trauma-informed care peer support specialists. here are also provisions on immigration reform and affordable higher education that we are monitoring. It’s now up to Congress to act on or improve on this bill. Watch this space for more detailed information on the proposals. Stay tuned on our blog and sign up for emails to get the latest updates.
Frequently, our job as advocates does not end when a policy passes the General Assembly. We need to know more detail about how the policy is reaching its intended goals and how we can improve the policy. Two recent examples from policies implemented during the summer months of 2021 point to two different stories and raise questions about how our state agencies, policymakers and stakeholders can help support targeted outreach to specific families.
Story #1: FAMIS Prenatal Coverage Changes Prompt Immediate Enrollment Successes
DMAS rolled out FAMIS Prenatal coverage for pregnant undocumented women on July 1, 2021 and has reported at a recent meeting of Medicaid stakeholders that more the 1,400 pregnant women enrolled in health insurance by the end of August. The income-eligible undocumented women will receive comprehensive health benefits through 60 days postpartum. Prior to the launch of FAMIS Prenatal, DMAS had enrolled slightly less than 400 pregnant women per month. During the first full month of FAMIS Prenatal enrollment more than 1,000 pregnant women enrolled. While data is not yet available with the new “FAMIS Prenatal” category, DMAS reports monthly enrollment figures for pregnant women, children and adults that can be tracked here.
While outreach for benefits in multiple languages is often difficult, DMAS and partners at Cover VA (Cubre VA) and Enroll VA are working to ensure that information is available in English and Spanish. These initiatives allow staff to offer individual support, navigate the enrollment process, and ensure applications are completed or help problem solve. These dedicated navigators can help build trust in the enrollment processes and ensure successful completion of enrollment.
The strong participation in FAMIS Prenatal shows that a policy change to cover undocumented women was needed and we hope that it will result in healthy births and healthy moms. It also shows the potential of engaging groups that have been previously excluded from eligibility when we expand the reach of coverage.
Story #2: Child Tax Credit Monthly Allowance Participation Raises Concerns About Outreach & Engagement
July 2021 also was the first month for monthly child tax credit payments to get direct deposited into accounts or mailed to recipients. Most families with children who filed taxes in 2019 or 2020 received direct deposits to bank accounts on file with the IRS or checks mailed home. These direct deposits came to bank accounts as “IRS TREAS 310 CHILD CTC”. If you did not receive a payment, visit the Child Tax Credit update portal.
While the first month of checks were excitedly received by many families to cover summer child care, meals and back-to-school expenses, families who previously earned too little to file taxes did not receive an automatic payment and were asked to produce information in a “non-filer portal”. These IRS portals allow easy initial access for individuals with smart phones and internet access, but they are not always easy to navigate and some specific identify verification steps were available in English only.
A research institute at Washington University in St. Louis produced a report for the Annie E. Casey Foundation on the initial participation in the Child Tax Credit during the month of July and found that families who identified as Hispanic in Virginia were significantly less likely to receive the tax credit than Black families or white families. Less than half of low-income Hispanic families received the credit in July compared to more than 70% of low-income Black and white families. Read Virginia’s fact sheet. This finding raises as alarm that the credit is not reaching all families equally and some intentional outreach should be provided to Hispanic and non-English speaking families.
For stakeholders who want to help Spanish-speaking families receive the credit, getctc.org/es is available to help navigate website and materials.
Steps to Improve Outreach
To improve outreach to Latino families, Virginia should always include resources to help translate materials and to train and educate stakeholders on initiatives in languages other than English.
It’s not too late to help Latino families receive the Child Tax Credit. Strategies that worked for health insurance enrollment and additional partnerships can be put in place now. State leaders should look to current year surplus funds to make sure resources are available during the 2021 tax filing season.
Provide support to file taxes in 2022: If families earn too little to qualify and have been unfamiliar with IRS processes or hesitant to file taxes, they can still be encouraged to use the non-filer portal before the end of the year, or to file their taxes in 2022 to claim the full amount for 2021. Additional resources should be provided for free tax filing and troubleshooting.
Partner with trusted community organizations: Community-based networks, United Ways and local philanthropy should help build bridges between trusted community organizations and tax preparation services to link families to help. Free resources like this CTC navigator training from Code for America are available to help community organizations better understand the process.
Provide one–on-one navigator support for other financial benefits: The successes of health care enrollment can be replicated by providing support to families to help them navigate other financial benefits such as tax credits, nutrition assistance, child care assistance and more. The state should provide training and resources to navigators in trusted community organizations and additional expertise to help more complicated situations that require problem-solving. Additional training and a statewide “support line” provided in English and Spanish could help families unlock resources to achieve stability.
Child Tax Credit Resources
GetCTC.org: information about CTC, and the GetCTC simplified return tool, in English and Spanish.
GetYourRefund.org: free tax prep services and FAQs for clients who want to file a full return in English and Spanish.
IRS CTC Update Portal: the IRS tool to check CTC eligibility status, opt-out of advance CTC payments and provide updated bank account and mailing address information for those who have already filed a 2019 or 2020 tax return.
IRS CTC Helpline: (800) 908-4184. The helpline connects clients to IRS representatives who can answer basic CTC questions. Assistance is available in English and Spanish. If a caller does not have access to the internet and does not have a friend or family who can help them do so, phone operators can also help callers opt-out of advance CTC payments. The caller will need to tell the operator that they can’t access the internet, and can’t get assistance to do so.
Alcance dirigido a las familias latinas: ¿Qué más debe hacer Virginia?
A menudo, nuestro trabajo como defensores no termina cuando una política es aprobada por la Asamblea General. Necesitamos aprender más detalles sobre cómo la política está alcanzando sus objetivos previstos y cómo podemos mejorarla. Dos ejemplos recientes de políticas implementadas durante los meses de verano de 2021 apuntan a dos historias diferentes y plantean preguntas sobre cómo nuestras agencias estatales, los responsables de las políticas y las partes interesadas pueden ayudar a apoyar el alcance dirigido a familias específicas.
Historia 1: Los cambios en la cobertura prenatal de FAMIS provocan un éxito inmediato en la inscripción
El DMAS puso en marcha la cobertura prenatal de FAMIS para las mujeres indocumentadas embarazadas el 1 de julio de 2021 y ha informado en una reciente reunión de las partes interesadas de Medicaid que más de 1.400 mujeres embarazadas se inscribieron en el seguro de salud a finales de agosto. Las mujeres indocumentadas que reúnan los requisitos de ingresos recibirán prestaciones médicas completas hasta 60 días después del parto. Antes del lanzamiento de FAMIS Prenatal, el DMAS había inscrito a algo menos de 400 mujeres embarazadas al mes. Durante el primer mes completo de inscripción de FAMIS Prenatal se inscribieron más de 1.000 mujeres embarazadas. Aunque aún no se dispone de datos con la nueva categoría “FAMIS Prenatal”, el DMAS informa de las cifras mensuales de inscripción de las mujeres embarazadas, los niños, y los adultos que se pueden seguir aquí.
Aunque la difusión de los beneficios en varios idiomas suele ser difícil, el DMAS y sus socios de Cubre VA y Enroll VA están trabajando para garantizar que la información esté disponible en inglés y español. Estas iniciativas permiten que el personal ofrezca apoyo individual, navegue por el proceso de inscripción, y se asegure de que las solicitudes se completen o ayude a resolver problemas. Estos navegadores dedicados pueden ayudar a crear confianza en los procesos de inscripción y asegurar la finalización exitosa de la inscripción.
La fuerte participación en FAMIS Prenatal demuestra que era necesario un cambio de política para cubrir a las mujeres indocumentadas y esperamos que se traduzca en partos y mamás saludables. También muestra el potencial de involucrar a grupos que han sido previamente excluidos de la elegibilidad cuando ampliamos el alcance de la cobertura.
Historia 2: La participación en la asignación mensual del crédito fiscal por hijos suscita inquietudes sobre el alcance y la participación
Julio de 2021 también fue el primer mes en que los pagos mensuales del crédito fiscal por hijos se depositaron directamente en las cuentas o se enviaron por correo a los beneficiarios. La mayoría de las familias con hijos que declararon impuestos en 2019 o 2020 recibieron depósitos directos en cuentas bancarias archivadas en el IRS o cheques enviados por correo a casa. Estos depósitos directos llegaron a las cuentas bancarias como “IRS TREAS 310 CHILD CTC”. Si no recibió un pago, visite el portal de actualización de Child Tax Credit.
Mientras que el primer mes de cheques fue recibido con entusiasmo por muchas familias para cubrir el cuidado infantil de verano, las comidas y los gastos de vuelta a la escuela, las familias que anteriormente ganaban demasiado poco para declarar impuestos no recibieron un pago automático y se les pidió que presentaran información en un “portal de no declarantes”. Estos portales del IRS permiten un fácil acceso inicial para las personas con teléfonos inteligentes y acceso a Internet, pero no siempre son fáciles de navegar y algunos pasos específicos de verificación de identidad estaban disponibles sólo en inglés.
Un instituto de investigación de la Universidad de Washington en St. Louis elaboró un informe para la Fundación Annie E. Casey sobre la participación inicial en el Crédito Fiscal por Hijos durante el mes de julio y descubrió que las familias que se identificaban como hispanas en Virginia tenían muchas menos probabilidades de recibir el crédito fiscal que las familias negras o las blancas. Menos de la mitad de las familias hispanas de bajos ingresos recibieron el crédito en julio, en comparación con más del 70% de las familias blancas y negras de bajos ingresos. Lea la hoja informativa de Virginia. Esta conclusion hace saltar la alarma de que el crédito no está llegando a todas las familias por igual y que se debería realizar una labor de divulgación intencionada entre las familias hispanas y las que no hablan inglés.
Para las partes interesadas que quieran ayudar a las familias de habla hispana a recibir el crédito, getctc.org/es está disponible para ayudar a navegar por el sitio web y los materiales.
Pasos para mejorar el alcance
Para mejorar el alcance a las familias latinas, Virginia siempre debe incluir recursos para ayudar a traducir los materiales y para capacitar y educar a las partes interesadas en las iniciativas en idiomas distintos del inglés.
No es demasiado tarde para ayudar a las familias latinas a recibir el Crédito Fiscal por Hijo. Las estrategias que funcionaron para la inscripción en el seguro medico y las asociaciones adicionales pueden ponerse en práctica ahora. Los líderes estatales deben buscar los fondos excedentes del año actual para asegurarse de que los recursos estén disponibles durante la temporada de presentación de impuestos de 2021.
Proporcionar apoyo para presentar los impuestos en 2022: Si las familias ganan muy poco para calificar y no han estado familiarizadas con los procesos del IRS o han dudado en presentar los impuestos, aún pueden ser alentadas a usar el portal para no declarantes antes de fin de año, o a presentar sus impuestos en 2022 para reclamar la cantidad completa para 2021. Deben proporcionarse recursos adicionales para la presentación gratuita de impuestos y la resolución de problemas.
Asociarse con organizaciones comunitarias de confianza: Las redes comunitarias, United Ways y la filantropía local deben ayudar a construir puentes entre las organizaciones comunitarias de confianza y los servicios de preparación de impuestos para poner a las familias en contacto con la ayuda. Existen recursos gratuitos, como esta formación de navegador de CTC de Code for America, para ayudar a las organizaciones comunitarias a entender mejor el proceso.
Proporcionar apoyo individualizado para otras prestaciones económicas: El éxito de la inscripción en el sistema de salud puede repetirse proporcionando apoyo a las familias para ayudarles a navegar por otros beneficios financieros como los créditos fiscales, la asistencia nutricional, la asistencia para el cuidado de los niños y más. El estado debe proporcionar formación y recursos a los navegadores en organizaciones comunitarias de confianza y experiencia adicional para ayudar en situaciones más complicadas que requieran la resolución de problemas. La formación adicional y una “línea de apoyo” estatal proporcionada en inglés y español podrían ayudar a las familias a desbloquear los recursos para lograr la estabilidad.
Recursos del Crédito Fiscal por Hijos
GetCTC.org: información sobre el CTC, y la herramienta de declaración simplificada GetCTC, en inglés y español.
GetYourRefund.org: servicios gratuitos de preparación de impuestos y preguntas frecuentes para clientes que quieren presentar una declaración completa en inglés y español.
Portal de actualización de CTC del IRS: la herramienta del IRS para comprobar el estado de elegibilidad de CTC, optar por no recibir pagos anticipados de CTC y proporcionar información actualizada de la cuenta bancaria y la dirección postal para aquellos que ya han presentado una declaración de impuestos de 2019 o 2020.
Línea de ayuda de CTC del IRS: (800) 908-4184. La línea de ayuda conecta a los clientes con representantes del IRS que pueden responder a preguntas básicas sobre el CTC. La asistencia está disponible en inglés y español. Si la persona que llama no tiene acceso a Internet y no tiene un amigo o familiar que le pueda ayudar a hacerlo, los operadores telefónicos también pueden ayudar a las personas que llaman a renunciar a los pagos anticipados de CTC. La persona que llame tendrá que decir a la operadora que no puede acceder a Internet y que no puede recibir asistencia para hacerlo.
The stagnation and lack of change in the childhood poverty rate calls for policy makers to do something dramatic and innovative about it. We are excited that the American Rescue Plan included enhancement to the Child Tax Credit to specifically to address childhood poverty with the goal in mind that the increase in cash assistance to families may be able to cut childhood poverty in half.
The enhancements to Child Tax Credit include:
Increasing the credit amount to $3,600 for kids under 6 and $3,000 for kids over 6;
Making the credit refundable and paid directly to families;
Offering the credit as an advance payment to families July-December, or a monthly allowance, that will be deposited directly into families’ linked bank accounts;
The Center on Budget and Policy Priorities estimates that 86% of children, 1.6 million, will benefit from the enhanced child tax credit in Virginia. And 249,000 kids will be lifted above or closer to the poverty line by the expansion.
For more info and to access the online tools to update status or file to receive the credit if your family did not have a tax liability, visit ChildTaxCredit.gov.
Access and download the PDFs below for more information (courtesy of the White House and Annie E. Casey Foundation) by clicking on the thumbnails.
How policymakers can act to help families experiencing financial hardship and maximize the Child Tax Credit.
During the August Special Session, state lawmakers can dedicate American Rescue Plan resources to improve tax filing outreach and preparation services to ensure non-filers and families with infants receive the credit.
Virginia lawmakers can also provide state level enhancements to the federal tax credits including a refundable Earned Income Tax Credit (EITC) and a state-level child tax credit.
Congress can act to make the Child Tax Credit permanent adopting the proposal included in President Biden’s American Families Plan.
