The new federal child tax credits have the potential to lift 75,000 households in Philadelphia out of poverty in one year, according to official city estimates.
But officials and nonprofit tax preparers are openly fretting that many qualifying families will not receive the payments at all, or will receive them late.
“The awareness gap is really big, and even beyond the awareness gap, the accessibility of all the steps it takes to actually file taxes is another hurdle,” said Julia Hinckley, policy director for the Mayor’s Office of Philadelphia.
Rolling out a huge, new program during a global pandemic is rife with challenges, and the amount of money at stake, transformative, based on official projections.
Between the child tax credits and boosted earned income tax credits, Philadelphians stand to receive more than $1 billion in direct payments from the federal government, said Hinckley. For context, that’s one-fifth of the total city budget.
City government estimates show that if everyone who is eligible to receive the child tax credits did, Philadelphia could reduce child poverty by one third, and deep child poverty by one half, in just one year.
Getting the word out
Philadelphia has long stood out for its high proportion of people living far below the poverty line, earning the enduring distinction as the poorest big city in the United States. However, the child tax credits are also a middle-class benefit, eligible to flow to nearly 90% of Philadelphia’s children, according to an internal analysis by the city.
Without more outreach, however, there are indications that some of the city’s poorest residents may not benefit.
The Campaign for Working Families, which provides free tax preparation to residents of Philadelphia, Southeastern Pennsylvania, and South Jersey who make less than $57,000 per year, had fewer clients and far fewer volunteers this year, said executive director Mary Arthur.
“The bottom line is … you can only get [the credits] if you file the 2020 tax return. You never get anything if you don’t,” she said.
“It has been very difficult,” said Will González, executive director of CEIBA, a coalition of Latino community-based organizations in Philadelphia that also conducts tax preparation. He estimated that about one-third fewer people had filed with his organization this year, due to COVID-19 difficulties.
In addition to reaching people who normally file, there are also thousands of people who don’t normally file taxes, but who are eligible for credits.
“There are lots and lots of people, including thousands of people in Philadelphia, who don’t file taxes every year for lots of reasons, most commonly due to disability,” said Kristen Dama, managing attorney with Community Legal Services. Certain forms of income, such as SSDI and SSI are not taxed, and so recipients do not normally file with the IRS.
“The goal right now is to try to get the word out to those families who don’t really think of themselves as tax-filers or people who never have to file taxes, that this year, things are different,” continued Dama.
There are an estimated 25,000 households in Philadelphia that do not regularly file taxes and are at risk of not receiving the benefits or receiving them late, according to officials.
Willard McGruder, 65, is among this group of irregular filers. McGruder lives on Social Security, and is raising two grandsons, Rahine, 3, and Keshawn, 8, in Overbrook. Until this year, he had not filed taxes in “several years” and was not aware he was eligible for the tax credits until Community Legal Services told him, he said.
He plans to use the funds to improve their home, perhaps buy a cable TV subscription, and update Keshawn’s wardrobe.
“He’s a healthy boy and he goes through clothes,” said McGruder. “It’s a good feeling that I can get a little bit more income to spend on the kids,” he continued.
You can still get tax credits, even if you file after May 17
The deadline to file 2020 taxes is May 17, but late filers only incur penalties if they owe the federal government money. That is a message city officials and tax preparers plan to ramp up now, as they try to encourage more people who do not normally file to do so before the payments are scheduled to roll out in July.
“We do not want the message to be if you don’t file by Monday, May 17, you’re out of luck. It’s still really great for you to file your taxes on May 18 or June 1 or maybe even later in 2021, because that money is going to be available,” said Dama.
For those who file on time, the benefit should roll out automatically. For each child age 6 or under, parents will receive up to $300 per month. For kids ages 6 and up, the number falls to $250. Half of the total amount per child will be paid out in these monthly installments through the end of the year, and the other half will be awarded in spring 2022. The IRS is planning to launch a portal, as it did with the recent stimulus awards, where recipients can check on their payments.
Groups like the Campaign for Working Families and CEIBA will continue offering their services through the summer and fall, trying to get more people in the queue. The campaign has been running radio and newspaper ads, and soon will be sending out street teams to go door-to-door to raise awareness to eligible residents.
To make an appointment with CWF or file virtually online, visit https://cwfphilly.org/.
However, they are not clear whether late filing will mean a delay in the credit payments.
“The big question is what happens when you file on the 18th,” said González.
WHYY is one of over 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push towards economic justice. Follow us at @BrokeInPhilly.
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