Federal refundable tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) offer potentially thousands of dollars to a family’s budget that can go into the local economy. But to get the money that residents have earned they need to claim it. Sadly, many still have not, but they still can even after the end of the tax season. Code for America has been collaborating with the White House and the U.S. Department of Treasury to create a product that will help individuals claim their Child Tax Credit.
The National League of Cities (NLC) spoke with Sarah McKitterick, the Senior Outreach Manager for Tax Benefits at Code for America, to learn about efforts that are underway to connect more individuals to the Child Tax Credit and outstanding stimulus payments and to hear more about innovations that municipal leaders should consider to connect their residents with the money they have already earned.
Municipalities across the country worked hard to raise the visibility of the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) and helped residents to claim these credits. Is their work done or should municipal leaders continue to prioritize these goals after the tax season has ended?
McKitterick: The work is never done! Despite incredible efforts by municipalities to encourage people who typically do not file taxes to do so, there are likely still many more people out there who could be eligible that didn’t file this year:
- It is estimated that there are 2.3 million children who may be at risk of missing out on the Child Tax Credit in the U.S.
- Plus, people who filed last year to get the first half of their Child Tax Credit payments need to file again this year to get the rest of their payments. So, individuals and families with children or dependents who got the $250 or $300 per child payments in 2021 need to sign up again to get the rest of their money – up to $1800 per child/ dependent. Many individuals may not know this.
- Despite outreach efforts, 1 in 5 people regularly miss out on the Earned Income Tax Credit each year. Individuals newly eligible for the EITC (including working individuals over 65 without dependents and certain young adults ages 18-24 who work) are also likely at risk of missing out on the funds.
Now that the “typical tax season” is over, it is time to refocus efforts to reach individuals who did not file so that we can help them get the funds that they are entitled to.
How will this benefit residents and what return on investment does the municipality realize through residents having more money to spend on basic needs?
McKitterick: Funds through tax credits have proven to help lift millions of individuals and families out of poverty.
According to a recent Brookings report, the expanded 2021 Child Tax Credit helped improve nutrition, decreased reliance on credit cards and other high-risk financial services, and also made long-term educational investments for both parents and children. The changes were especially promising for Black, Hispanic, and other minority families, and families with low and moderate incomes.
According to the Brookings Institution, the most common reported uses of the CTC were:
- Routine expenses such as housing and utilities (70%)
- Clothing or other essential items for children (58%)
- Purchasing more food for the family (56%)
- Saving for emergencies (49%)
- Paying off debt (42%)
Funds available through tax credits not only reduce financial hardship on individuals and families who may be struggling right now – they also support local economies, bringing potentially millions of dollars to local businesses and strengthening communities. A Niskanen Center report estimated that the Child Tax Credit expansion would boost consumer spending by $27 billion and generate $1.9 billion in revenues from state and local sales taxes.
How can the tool that Code for America has developed help residents and municipal data collection efforts?
McKitterick: Code for America’s GetCTC.org tool is a simple way for people that do not typically file taxes to do so. The tool enables people to claim the Child Tax Credit and the third stimulus payment by completing a simplified version of a tax return. The process takes on average around 15 minutes, is user-friendly, and can be done on your mobile device. It is in English and Spanish and chat support is available.
Municipalities that engage in outreach can use a unique URL and data dashboard to track success. The dashboard will show the number of simplified returns filed, the average amount received per household, and the total number of dollars into your local economy. This data provides clear insight into how outreach efforts are impacting the number of tax returns filed and the impact on residents and the local economy.
What are some of the innovative or best practices that municipal leaders have implemented to connect their residents to the Child Tax Credit and stimulus payments through the tool? Are there any messaging suggestions you would have for municipal leaders to consider when trying to engage their residents after tax season?
McKitterick: We have created a website, codeforamerica.org/CTCoutreach, to help guide municipalities with their outreach and track success. We encourage every municipality to visit the site, share what they’re doing, claim a unique URL, and track their progress. Municipalities may also consult with our team for support. We will be highlighting efforts on the website throughout the year.
There have been incredible efforts by municipalities to connect with people who have not filed taxes. The City of Philadelphia funded grassroots partners to do outreach and engagement with key populations and texted, called, and mailed residents. The City of Mesa also led a citywide campaign that included text messages to 150,000 residents, a video from Mayor Giles encouraging residents to sign up, school district communications, media in Spanish, and grassroots outreach through local nonprofit organizations. Both cities used unique URLs to track their progress.
We also recommend the following:
- Identify your target audience: people most likely to miss out on tax credits include recipients of public benefits (such as SNAP and Medicaid), immigrants, and individuals with low or no incomes.
- Include a link to childtaxcredit.gov or GetCTC.org in the initial message. Your beneficiaries need a clear call to action.
- Request/use a unique URL from Code for America to track the number of returns filed, the average amount of money your residents received, and more.
- Use clear messaging:
- Identify your municipality or municipal department in the message.
- Consider including language stressing these are credits your audience deserves; these benefits belong to them.
- Note that these funds do not impact most public benefits programs and are safe for immigrants to claim.
- Consider highlighting that this is only for those who have not yet filed taxes this year.
- If applicable, you can include an offer of local assistance along with a link to GetCTC.
- Send direct messages: including text messages, emails, mailed letters, robocalls, banners on municipal websites, staff guidance/ call center scripts, and call center hold messages.
Visit codeforamerica.org/CTCoutreach for more information, outreach toolkits in multiple languages, request a unique URL, and for additional support.
For more information about municipal Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) outreach efforts reach out to Patrick Hain at eofe@nlc.org.
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Sign up for the Economic Mobility Peer Network to connect with other cities and hear from leading experts on topics designed to help cities boost residents’ economic mobility including tax credit outreach campaigns using strategies grounded in equity.
Written with contributions by Sarah McKitterick, Senior Outreach Manager for Tax Benefits at Code for America.
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