After five years, Candy Gutierrez has grown used to the stress of being a single mom. There have been times when she’s worried she won’t make rent, or had to ask for help paying the electricity bill — then ask for help again.
On the morning of July 15, Gutierrez received a welcome notification from her bank. The Internal Revenue Service had just deposited $300 into her account, the first of six monthly child tax credit payments she’ll receive through December. It was help she didn’t have to ask for.
That weekend, she bought backpacks and crayons and uniforms for her two kids, ages 4 and 11, who start school in about a week. A week after that, Gutierrez, 30, will start school herself — a goal that she’s worked toward for two years, taking pre-requisite classes between work and parenting with the help of the career-development nonprofit, Project ARRIBA.
In her first semester as a full-time nursing student at Texas Tech University Health Science Center El Paso, she’ll have to quit her job as a medical assistant, dip into savings, and apply for scholarships and loans. Since learning about the child tax credits, she’s been counting on that monthly $300.
“It definitely helps relieve some stress as far as how am I going to be able to afford my life for the next six months,” Gutierrez said. “That little bit of extra income makes a difference. Really.”
Child tax credits have been part of the U.S. tax system for more than two decades. On March 11, the passage of the American Rescue Plan made temporary changes to these credits, which are slated to end after the coming tax season. The ARP increased the overall credit amount from $2,000 to $3,000 for kids ages 6 to 17, and up to $3,600 for kids younger than 6.
It also allowed households to choose between receiving this money all at once when they filed their taxes, or receiving the first half of their credit in six advance monthly payments. And for the first time, the ARP made the poorest families eligible to receive the child tax credits. With these changes, experts have estimated that the ARP — and the child tax credits in particular — could have a transformative effect on child poverty, holding the potential to cut it in half.
“I think this is the single most significant piece of legislation that has ever been approved to move children out of poverty,” said Sylvia Acosta, CEO of the YWCA Paso del Norte Region.
In El Paso County, more than 58,000 children — more than one in four children — live below the poverty line, according to 2019 estimates from the U.S. Census Bureau’s Small Area Income and Poverty Estimates Program. The county’s overall poverty rate for 2019 was nearly 19%, SAIPE estimated — about eight points higher than the rest of the country.
“Obviously we live in a very economically disadvantaged community,” said U.S. Rep. Veronica Escobar, D-El Paso. “And so I think that the money will go a long way for our families.”
On July 15, as the $300 arrived in Gutierrez’ account, the U.S. Treasury Department announced it had sent about $15 billion to U.S. families — what amounted to nearly 60 million children nationally — in its first installment of the monthly tax credits. Locally, Escobar’s office announced in a press release that 53,800 households would receive tax payments in her congressional district, which encompasses most of El Paso. The payments would cover about 94% of her constituent’s children and lift 16,000 of those children out of poverty.
4 million children could miss out on payments
The Treasury Department has said that nearly 90% of families will, like Gutierrez, receive their monthly checks automatically. “The challenge,” said Laura Scherler, senior director of Economic Mobility and Corporate Solutions for United Way Worldwide, “is reaching the folks who are probably the most vulnerable.”
This includes people without stable housing, whose addresses change periodically; parents who are undocumented with children that qualify for the payments, but who might fear providing their information to the government; and people with incomes low enough that they don’t typically file taxes, and therefore can be difficult for the IRS to find.
In 2020, for example, a head of household making less than $18,650 a year would not be required to submit a tax return.
To accommodate these families, the IRS launched a separate “non-filer” portal where they can sign up to receive the credits.
The day before the credits’ July 15 rollout, however, a senior Biden administration official told reporters that while the White House expected checks to reach roughly 39 million families by the end of July, millions had not yet registered to receive the payments. If that trend continues, the Center on Budget and Policy Priorities, a nonpartisan think tank based in Washington, D.C., estimates that about 4 million eligible children are at risk of missing out on the payments.
“The concern is that this money will be available, but then families won’t apply for it,” Acosta said.
There are a number of reasons families might not apply. Some might not be aware of the expanded credits, or aware they’re newly eligible. Many are wary of the IRS and the tax system more generally, Scherler noted.
“I think there is fear of making a mistake,” she said. “People are afraid of getting a letter a year later and being asked to pay a bunch of money that they don’t have.”
Acosta is most concerned that El Paso families who speak only Spanish may fall through the cracks. While the IRS provides Spanish-language guidance on both the child tax credits and the non-filer portal, to date, the application itself is available only in English.
Acosta also worries that families in rural parts of the county, where there is less access to transportation and internet, may have trouble signing up. Meanwhile, local United Way branches have reported to Scherler that the new portal is not mobile friendly — another barrier for low-income folks, who typically use their phones for internet access.
Reaching El Paso’s most vulnerable
To bridge these gaps, Escobar said her team mailed 30,000 letters in Spanish and English to households making $50,000 or less to increase awareness about the payments. Her office, along with area nonprofits and school districts, will be conducting public information campaigns that include radio and TV announcements and possibly texts and robocalls to get the word out.
Escobar also plans to conduct a town hall meeting in early August with an IRS official in attendance to answer questions about both the child tax credits and the economic relief payments.
Nationally, the IRS has also partnered with thousands of local agencies and nonprofits to raise awareness about the credits, and has kept hundreds of Volunteer Income Tax Assistance, or VITA, programs open to help families with registration.
El Paso’s VITA sites, run by the credit union GECU, are currently “dormant,” according to spokesperson Ruby Alvarez, but the bank’s Community Development Department continues to field tax questions by phone.
Both Escobar and Acosta expressed confidence about reaching eligible families who have not yet signed up for the credits — in large part because of the community relief infrastructure that developed in response to COVID-19. During tax season, Alvarez said a number of new tax filers sought assistance from VITA in order to receive economic stimulus payments, which were also distributed by the IRS.
“I feel a lot better today about families not being left out than I did at the beginning of the pandemic, when we really were doing a lot of that ramping up work,” Escobar said. “But we want to make absolutely sure that every penny that an El Paso family deserves actually gets into their bank accounts.”
Even if every El Paso family were to get those payments, however, the child tax credit expansion is temporary, slated to end after the coming tax season. Gutierrez said she’s OK with that. The advance payments, she said “will alleviate stress. Now I just need to put them to good use.”
Cover photo: Candy Gutierrez bought school supplies for her two children using the first of six monthly payments she’ll receive as part of the American Rescue Plan’s one-year expansion of child tax credits. (Julián Aguilar/El Paso Matters)