The Child Tax Credit payments are missing some of the most vulnerable families

Thirty-six million families got their fourth installment of their monthly Child Tax Credit payments last week, but some of the most vulnerable households are still missing out — especially Spanish-speaking ones.

More than 3 in 10 eligible low-income families haven’t received their August payment a month after they were supposed to, according to a University of Michigan survey of 3,000 low-income U.S. parents living with children under 18, while over 1 in 10 have received no payment at all because they were unfamiliar with the credit or how to get it.

That could reduce the credit’s effectiveness in combating child poverty — a major benefit touted by supporters of the CTC — especially as Congress debates whether to extend the credit’s expansion in its most recent legislation.

“Those are the people that we are worried about — who didn't seem to know why they hadn't got the credit and who had some sort of confusion about their eligibility,” Natasha Pilkauskas, co-author of the policy brief and associate professor at University of Michigan, told Yahoo Money. “It's critical that we figure out how we get money to these folks.”

‘They're just not catching up in the same way’

Spanish-speaking families were more likely to miss out on the CTC payments, according to the study.

Over half of parents who took the survey in Spanish (54%) said they had received the payment, while 69% of English-speaking parents reported they got one. Spanish-dominant families were also less likely to have heard of the CTC.

“There's something about outreach to the people who are speaking primarily Spanish that's not quite as effective as getting the message out to the English-language speakers,” Pilkauskas said.

One partial reason was a glitch in the disbursement process that left out some “mixed-status” families where one spouse has a different immigration status or citizenship than the other. After the problem was fixed, the gap between English and Spanish-speaking parents receiving payments did narrow, but remained high in August.

Additionally, families with lower education levels reported lower recipiency rates. Only 60% of parents with high school degrees got a payment in August, compared with 73% for those who had an associate degree or higher.

“They're just not catching up in the same way to the other folks with higher education,” Pilkauskas said. “Some of that I do think is driven by their tax filing.”

Parents with lower levels of education also were less likely to have filed their 2020 taxes compared with those with higher education levels. That’s also the case for Spanish-speaking families versus English-speaking families.

That’s a key distinction because the Internal Revenue Service bases the payments on a household’s 2020 tax filing. Non-filers must take an extra step and register online with the IRS to start getting those payments.

Many low-income families may also not provide their information because they think they’re not eligible or worry the credit could impact their eligibility for other public benefits. Immigration status may hold other families back. While parents can use an ITIN to register for payments as long as their child has a Social Security number, some may be reluctant to do so.

‘The potential to benefit the most’ from the Child Tax Credit

Low-income families stand to get the biggest boost from the expanded CTC. The bottom 20% of families that make less than $21,300 will see their income increase 35% — getting an extra $4,470 on average, according to an analysis by the Institute for Taxation and Economic Policy.

“This sample is incredibly low income, the average is basically the poverty rate” Pilkauskas said. “This population really has the potential to benefit the most.”

Child poverty could be reduced by half this year because of the enhanced CTC, decreasing from 13.7% in 2020 to 6.5%, according to estimates by the Urban Institute, if the payments get to the poorest.

“If we don't make any sort of effort to do outreach towards folks who really don't speak English,” Pilkauskas said, “I'm not sure we will make as much progress.”

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

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