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Advocates, lawmakers seek to alert Mich. families with kids about expanded Child Tax Credit

Melissa Nann Burke
The Detroit News

Washington — An urgent outreach effort is underway in Michigan and around the country to reach millions of low-income families ahead of the roll-out this week of the Biden administration's broad anti-poverty initiative.

The Internal Revenue Service will begin sending monthly payments starting Thursday to most families with children as part of the newly enhanced Child Tax Credit that President Joe Biden signed into law in March under the American Rescue Plan. The families of an estimated 1.9 million children under 18 in Michigan should be able to benefit from the credit, advocates say.

The maximum tax credit has been increased from $2,000 to $3,600 for each child under age 6, and to $3,000 for each child aged 6-17. A parent with 3- and 7-year-olds would receive $6,600 in credits.

The Internal Revenue Service is going to automatically make one-time enhanced child tax credit payments to families that already have filed federal income tax forms as well as eligible non-filing families who sign up through an IRS website.

But some children with the greatest need could miss out on the relief payments because their households aren't in the IRS system, lawmakers and advocates say. That could be because their families earn too little income to have filed tax returns recently. Previously, the Child Tax Credit wasn't available to non-filers.

That category includes an estimated 64,000 children in Michigan who are likely eligible for the credits but at risk of not being claimed, according to a Treasury Department analysis produced to help community groups and others target public education campaigns to areas where the children might live.

"The reason why the outreach is so important is we want to make sure that non-filers understand that this credit applies to them," said Rep. Dan Kildee, D-Flint Township, who did an outreach event Thursday in Saginaw.

"They won't get it automatically the way a person who is a consistent filer would get it. They have to actually go online and apply using their Social Security Number or whatever tax identification number they have in order to have the benefit delivered to them."

The IRS has set up a portal for "non-filers" to sign up using a form via Families that filed tax returns for 2019 or 2020 or who signed up to receive a stimulus check from the IRS are supposed to get the tax credits automatically. 

Signing up won’t affect eligibility for other federal benefits such as food stamps, rental assistance or public health insurance because the tax credits don't count as income, officials said. All kids with a Social Security Number can receive the credits, even if their immigrant parents aren't citizens.

And this isn't just for the poor. Families with children under 18 years old making up to $112,500 as a head of household or $150,000 as a married couple are eligible.  

Flint mom would benefit 

Latrese Brown, a single mom, lives in Flint with her two children, ages 5 and 2, both of whom are eligible for the newly expanded Child Tax Credit. Brown expects to receive $300 a month in credits for each child through the end of the year, and already has started mapping out how to spend it.

"I actually just purchased my first home last December, and it's been kind of rough getting things balanced again," said Brown, who is 25 and works for the city. "This will give me that breath of fresh air, catching up on bills and just having more opportunity to do things with my kids."

Her son istarts kindergarten in the fall, and she said she expects to use the money for supplies and tuition for his private school.

"Education for my son, I feel like that is really important," Brown said. "Being able to afford better education I feel like is a great opportunity."

Latrese Brown and her son Quanzell Brown, 5, outside their Flint home on Saturday, July 10, 2021. Brown,  is eligible for the newly expanded Child Tax Credit. She will receive $300 a month in credits for each child through the end of the year.

About 90% of children in Michigan should be able to benefit from the tax credit — close to 2 million children, "which is huge," said Gilda Jacobs, CEO and president of the Michigan League for Public Policy in Lansing. 

"When you take kids out of poverty, you have great long-term effects: Healthier kids, better educated kids, kids more likely to go to college. There's data showing there's a lifetime of improvements from having this kind of financial help," Jacobs said. 

The relief is especially needed now, particularly with women and mothers disproportionately affected by the economic hardship of the coronavirus pandemic, she said.

Child allowance model

The expanded Child Tax Credit builds on a model known as the child allowance or child benefit used in other countries like the United Kingdom and Canada.

Instead of providing services for low-income families, the idea is that a stable income helps them avoid eviction or cover the costs of utilities or child care or food — even saving the benefit toward the cost of college, said Luke Shaefer, director of Poverty Solutions at the University of Michigan. 

"It has the possibility to be the most transformational thing that we do to confront child poverty in at least 50 years. And maybe ever," Shaefer said.

He stressed the importance of the same benefit going to families whether they are extremely poor or middle class.

"It's an important change when we treat all kids the same," Shaefer said. "This says, you know what? All families are struggling. Raising kids is expensive, so we're going to provide the exact same kind of support. I think that really changes the way people are going to perceive it."

But the expansion is temporary, with Congress putting it in place for just one tax year.

Cutting child poverty

If the tax credits reach all the eligible families, it's estimated the program could reduce child poverty in the United States 45%, and cut it in Michigan 44%, according to an analysis by the Center on Poverty and Social Policy at Columbia University. 

In Detroit, Shaefer's team estimated that the tax credits could lift 20,000 kids over the poverty line. "The big thing in Detroit is it's going to it's going to reduce the severity of poverty quite a bit," Shaefer said. 

Community groups and elected officials are trying to spread the word. As part of the outreach push, Detroit Mayor Mike Duggan is scheduled to give an address at 7 p.m. Monday, walking families through the process of claiming the one-time tax credit.  

“We are going to do everything we can as an administration to make sure every eligible family in our city is able to take advantage of this incredible opportunity," Duggan said. 

The credit is divided into monthly payments, so families can expect up to $250 a month for each child between 6 and 17 and up to $300 a month for each child under 6 through the end of the year. The rest arrives in a lump sum at tax time.

That piece was something Kildee, a member of the tax-writing Ways and Means Committee, pressed for in the legislation "because families don’t live their lives tax year to tax year — they live their lives on a monthly budget," he said. 

"This gives them direct support on a monthly basis and meets those families where they are," said Kildee, adding that 23,000 children in Flint are expected to benefit.

"I can’t think of another vote I’ve cast that will have a more immediate, transformational effect on the people I represent than this particular provision."

Nicole Fuller of Madison Heights has three kids, ages 12, 17 and 19. She was laid off from her job in diagnostic radiology at a hospital last year, and her husband's hours were cut at his job, she said.

Fuller, 41, went back to work after six months to a different position at the hospital, but at that point was behind in car payments and tuition to her kids' school, among other bills. 

"You never think that you'll be laid off during a pandemic when you work in the health  field," she said. 

Fuller will qualify for the tax credits for her younger two kids, about $500 a month for both.

"It will finally give me a little cushion. If we want to travel or do a family event on the weekends, I won't have to put a bill aside to have fun or if my kids need new shoes," Fuller said. "That money is going to help us out with just everyday living."

"I wish they would make it permanent," she added. "It would help a lot of families with basic living needs. Some of us are right on the edge."

Temporary benefit

Making the expansion permanent is something Sen. Debbie Stabenow, D-Lansing, is pushing for. Extending it by five years, as President Biden has proposed, is "critical," she said. But doing so requires that Congress take action. 

"What we've seen in the past is the tax code has benefited wealthier individuals. In 2017, there was a $2 trillion tax cut, and almost none of that went to the families we're talking about, right?" Stabenow said. 

"What's revolutionary about this is that this is actually making the tax code work for working families."

The one-year expansion of the Child Tax Credit cost about $100 billion. The credit has generally enjoyed bipartisan support, and Republicans such as Sens. Marco Rubio of Florida and Mike Lee of Utah have in the past supported increasing it and expanding its eligibility.

But they oppose turning it into a "child allowance" paid out as a form of universal basic income, they said.

"That is not tax relief for working parents; it is welfare assistance," the GOP senators said in a joint statement earlier this year. 

“An essential part of being pro-family is being pro-work. Congress should expand the Child Tax Credit without undercutting the responsibility of parents to work to provide for their families.”