CTC and ACTC Participation Results and IRS-Census Match Methodology, Tax Year 2020

• In Event: Family Support in the Tax Code

Abstract

The Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) offer assistance to help ease the financial burden for families with children. This paper presents a new methodology for estimating participation (take-up) of the CTC and ACTC that relies on linking the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) to IRS administrative data. This approach, called the Exact Match, uses survey data to identify CTC/ACTC eligible taxpayers and IRS administrative data to indicate which eligible taxpayers claimed and received the credit. Overall, in tax year 2020 eligible taxpayers participated in the CTC and ACTC program at a rate of 93 percent while dollar participation (take-up of eligible dollars) was 91 percent. The paper presents participation by various socioeconomic characteristics, adjusted gross income, eligible credit amount, and filing status. It also presents characteristics of eligible taxpayers who do not participate in the program. Future work will extend the methodology to other tax years spanning 2018-2022 to show trends in participation and also include the expanded Child Tax Credit of 2021 under the American Rescue Plan.

Authors

• Charles Hokayem, charles.hokayem@census.gov

• Ethan Krohn, Internal Revenue Service

• Ciyata Coleman, IRS/US Dept.Treasury