The monthly child tax credit has now been paying out benefits for three months. At this point, initial kinks have had some time to be worked out and so it is a good time to reassess what we currently know about the rollout of this new program.

The Treasury and the IRS have periodically published statistics about the program in agency press releases. The press releases are as follows:

  • May 5: Initial estimates of number of recipients (Treasury, IRS).
  • July 15: Data from first month of payments (Treasury, IRS).
  • August 13: Data from second month of payments (Treasury, IRS).
  • September 15: Data from third month of payments (IRS).

In the May 5 releases, the agencies claimed that the IRS would make payments to “more than 65 million children” living in “roughly 39 million households,” which was “88 percent of children in the United States.” According to the releases, these children would receive this money automatically based on already-existing information in the IRS tax record database.

If 65 million children is equal to 88 percent of all children, then that means there are around 73.9 million children overall in the US, which is also how many children the Census says there are. According to the 2019 CPS ASEC, around 2 percent of children live in families that are too rich to receive the CTC, which means that, in the May 5 release, the IRS and Treasury were effectively announcing that around 10 percent of children are eligible for the benefit but would not receive it automatically based on the existing tax record database. This 10 percent would include children living in families that are too poor to file taxes and children born in the last year among others.

In the July 15 releases, the agencies reported that they only sent out the first payments to 59.3 million kids living in 35 million households. So somewhere between May 5 and July 15, “more than 65 million children” fell to 59.3 million children. As far as I know, this drop has not been explained.

In the August 13 releases, the agencies reported that they sent out the second payments to 60.9 million children living in 36 million households. This was an increase of 1.6 million children from the prior month. The likely reason for this increase is that, in July, the IRS had failed to make payments to children with SSNs who live with parents with ITINs. In August, they corrected that error.

For the third payment issued on September 15, the Treasury did not issue a press release or provide any data on the number of recipients. The Treasury was the agency that was reporting how many children received the payments and so their September silence means we do not have any data on the number of children who received the third payment. The IRS did continue to report the number of households receiving benefits in September: the number fell from 36 million households in August to 35 million households in September.

The following graph sums up all we know from the above analysis. For September recipients, since we do not know how many kids received it, I put the same number that received it in July, since the IRS reported that the same number of households received the benefit in July and September.

As of September, around 13.1 million eligible children are not receiving monthly payments, which is equal to 18.1 percent of all eligible children.

The identity of these children is hard to determine from the data that has been published. Some of them live in households where parents have opted out of receiving the monthly CTC. The IRS set up a portal allowing parents to do this and some unknown number have taken advantage of this ostensibly because they fear they will receive an overpayment that will result in a surprise tax bill in early 2022.

Others live in households where the parents do not file taxes and therefore were not automatically signed up for the CTC. We do not know how big this number is, but the CPS ASEC microdata suggests that around 5.5 million children live in non-filing tax units. The IRS allows these kids to sign up via a website by filing an empty tax form, but so far the administration has not published any information about how many have successfully used this website. The only data it has published that is related to this came in the Treasury’s July 15 press release, which announced that 720,000 children were getting payments because their parents had previously used a non-filer website to sign up for one of the three economic impact payments.

Overall there are way too many kids missing from the monthly CTC rolls and it is not encouraging that the number is now dropping just three months into the program. The IRS and Treasury need to be publishing more comprehensive information about the rollout of the program. Every month when the payments go out, the agencies should release a table that contains at least the following information:

  1. An estimate of how many kids are eligible for the CTC.
  2. The actual number of kids who received the CTC.
  3. The number of non-recipients who have opted out.
  4. The estimated number of non-recipients who are non-filers.
  5. The number of kids who opted out in the last month.
  6. The number of non-filer kids who signed up in the last month.

This kind of information, which the IRS should have handy, will allow the public and lawmakers to evaluate the program and determine whether reforms are needed to fix its problems.