CTC solves if not for filing problems
María E. Enchautegui et al 23, Research Director at Youth Development Institute in Puerto Rico; Christopher García Sánchez, Public Policy Manager; Vallerie Blakely-Vallecillo, Investigative Analyst; Liana E. Carrasquillo Vázquez, Economic Mobility Laboratory Manager; Carmen I. Rodríguez, Advocacy Director; Caridad A. Arroyo Quijano, Statistics Manager, “The Child Tax Credit in Puerto Rico: Impacts on Poverty and the Lives of Families”, Instituto del Desarrollo de la Juventud, February 1 2023, file:///C:/Users/nheft/Downloads/EN-CTC2022-20230123.pdf, NSH-NT
Against this backdrop, the Child Tax Credit (CTC), which was expanded by the American Rescue Plan Act (ARPA) in March 2021, came as a breath of fresh air and a unique opportunity to improve the economic conditions of hundreds of thousands of families with children in Puerto Rico.
In 2021, the CTC awarded $3,000 per child aged 6 to 17 and $3,600 per child aged five and under. It is estimated that 305,000 families in Puerto Rico could have been eligible for the CTC. Considering the high income limits and that no income from employment was required, the CTC practically applied universally to families with children across the archipelago of Puerto Rico.
Concurrent with the CTC that was put into place under ARPA, the federal government made up to $600 million available annually to the local government to strengthen the Earned Income Tax Credit (EITC), which made work pay for families that earn low salaries in the labor market.
Studies in the United States have demonstrated the potential tax credit policies have for cutting child poverty and opening a path toward families’ economic mobility and security. The EITC and the CTC are part of the social and economic protection system for families, and these two policies are the ones that have the greatest potential for reducing child poverty.10 Recent studies show that the expanded CTC under ARPA reduced child poverty in the United States by almost half.11
It has been a challenge to ensure that all families in Puerto Rico that are eligible for 2021 expanded CTC receive the benefit. Puerto Rico’s taxpayers generally do not file federal tax returns and are, therefore, unfamiliar with the process. Furthermore, a significant percentage of the population is not fluent in English, and many do not have the necessary resources to file a federal tax return. Lastly, the changes made to eligibility requirements may have created confusion since, before ARPA, only families that were employed and who had three or more children were eligible.