Child Tax Credit Update: 4 Million Kids May Lose American Rescue Plan Payments

Around 4 million kids from low-income families could be missing out on receiving the monthly child tax credit payment this year, according to a new report.

Since July, the American Rescue Plan has allowed the IRS to pay out up to $300 a month per child younger than age 6, and $250 for older kids under the age of 18 years old to eligible families.

On Thursday, a report by the Center on Budget and Policy Priorities claimed the children of parents who didn’t submit their information through the IRS non-filer portal, file a tax return, or use the portal to claim their Economic Impact Payments (EIPs) are at risk of losing the monthly child tax credit payment for the rest of the year.

Data gathered by Medicaid and the Treasury Department estimates 4 million children will be at risk of losing the monthly payment of the enhanced child tax credit. However, the estimate isn’t accurate, which means even more kids could be impacted.

“We don’t actually know how many children there are totally outside the tax system,” said Elaine Maag, a principal research associate at the Urban-Brookings Tax Policy Center. “Nobody knows what the target number is.”

The estimation was based on a variety of statistics such as the 2.3 million children who weren’t claimed by a parent on an existing tax return but are signed up for health insurance coverage through public programs designed to aid low-income families.

Meanwhile, another 1.6 million children are expected to be born in 2021 with health coverage through Medicaid.

Families who have either filed their taxes or used the EIP will automatically receive the advance payments from the IRS. As part of the Rescue Plan, the IRS will be able to distribute monthly payments for the child tax credit from July until December.