Just Taxes Blog by ITEP

Inclusive Child Tax Credit Reform Would Restore Benefit to 1 Million Young ‘Dreamers’

Inclusive Child Tax Credit Reform Would Restore Benefit to 1 Million Young ‘Dreamers’

April 27, 2021

Marco Guzman
Marco Guzman
State Policy Analyst

As the Biden administration maps out the next steps in America’s response to the coronavirus pandemic—through what is now being called the American Families Plan—it should make sure a proposed expansion of the Child Tax Credit (CTC) includes undocumented children who have largely been left out of federal relief packages this past year. An equitable recovery should be inclusive of all families and children.

The 2017 Tax Cuts and Jobs Act (TCJA) unduly singled out immigrant families by requiring children to have a Social Security number (SSN) to receive the CTC. Prior to TJCA, all children regardless of their immigration status received the credit as long as their parents met the income eligibility requirements. This change essentially excluded around 1 million children and their families from the credit. TCJA provides a $500 dependent credit available to undocumented children and others ineligible for the CTC, but most low-and moderate-income families earn too little to access this benefit since it is nonrefundable.

The American Families Plan provides an opportunity to fix the unwarranted changes to the CTC under TCJA with the potential to reach around 1 million children and their families. That’s vital money for parents and children dealing with the hardships brought on by the pandemic and exacerbated by the threat of falling deeper into poverty.