Federal Child Tax Credit Expected to Reduce Child Poverty in Alaska

Children at Campfire Summer Camp in Anchorage. Data from the Center for Budget and Policy Priorities shows that 167,000 children in Alaska would benefit from an expanded tax credit. (Matthew Faubion/Alaska Public Media)

The expanded federal tax credit for working families was introduced last week as part of the US bailout bill. Many have already seen their bank account added $250 to $300 per child this month. It’s a plan that experts say will halve child poverty across the country — including Alaska.

Stephanie George is a single father of two sons who live in Eagle River. Her son Parker is in fifth grade and Brayden is in middle school. They both have autism. The past few years have been difficult for the family.

A fire inside her home just before the 2018 earthquake, which led to living in hotels, rentals, and, for seven months, destroyed a wagon in their driveway. The care and schooling of both boys without behavioral health staff during the pandemic has been another challenge.

“They just need so much,” George said. “During the pandemic, I had to basically do fifth grade with the fifth grader and stay on top of all this stuff with the middle school student and basically re-teach the fifth grader because he couldn’t wrap his brain around the distance stuff.”

Stephanie George is the mother of two children with autism. She says the federal tax credit for children would be a huge help to make ends meet. (Photo courtesy of Stephanie George)

George, who has a master’s degree in special education and educational administration, used to provide special counseling for school districts until the pandemic. But she said it has been difficult to find a job that feels safe, especially because she has a medical condition that prevents her from getting vaccinated, and her youngest son is too young to get vaccinated. For now, she relies on Social Security payments, food stamps, and pandemic mortgage protection to make ends meet.

With all that hanging on to her, George said an extra $250 a month for each of her kids wouldn’t solve everything, but it would be very helpful to be able to pay her bills.

“Having that money will at least allow me to pay the basics so I can try to find something part-time or, you know, find a solution,” she said. “Give me a little wiggle room.”

In the past, families received a $2,000 tax credit for children ages 0-16 when they filed their annual taxes. The expansion increases the eligible amount for families and raises the minimum age for children to 17. Families will receive up to $3,600 or $300 per month per child under 6 and up to $3,000 or $250 per month per child 6-17.

For the next six months, families can receive the first half of their money as monthly payments. The second half will be paid when they file their taxes.

Full Extended Credit is available to single parents who apply as head of household who earn less than $112,500 or to married parents who together make less than $150,000. The amount goes down for high-income families.

The automatic monthly payments started coming out on July 15, and George didn’t have to wait long to get paid.

“Indeed, my USPS informed receipt has just arrived,” she said, checking her email. “That sounds like the IRS kind of check in the mail today.”

Data from the Center for Budget and Policy Priorities shows that 167,000 children in Alaska would benefit from an expanded tax credit. As a result, more than 20,000 of them will be raised above or close to the poverty line.

It’s especially important for rural communities that don’t have strong economies even though the cost of living is higher in those places, said Mohsen Gitabi, an economist at the University of Alaska Anchorage.

“Obviously things get more expensive the further away from central Alaska,” he said. “However, those dollars are likely to be needed more in those places and can make a greater impact in an environment where cash is hard to come by.”

Al-Qatabi said he expects many families, like George’s, to benefit from being able to cover the bills with extended credit. Others may use it to make one-time purchases to dramatically improve their lives.

“There is very good research that shows that even a one-time income increase early in someone’s life can affect their trajectory. Consider being able to make a down payment on a car so you can take your child to childcare, or have a better job. There are all kinds of little examples that can change the course of someone’s life.”

Kara Dorr, a spokeswoman for the Alaska Food Bank, points to expectations for data showing lower food insecurity among children in many parts of Alaska this year than in 2019. She sees that reaching down to relief programs such as stimulus payments and EBT benefits for the pandemic. She said she hopes the children’s tax credit will have a similar effect.

“I can’t overemphasize the importance of these kinds of resources,” she said. “And I think something like the child tax credit is really cool because it allows families to take that money and put it into whatever their most extreme needs, it’s not mandatory.”

The extended credit is set to only last one year unless Congress takes action. It seems like a missing piece of the social safety net, George said.

“I feel that if we’re not going to have accessible or affordable childcare, or we’re not going to put in paid leave for parents when kids get sick, and all these different things like most first world countries, then I really think it should continue.”

Most working families who filed taxes in 2019 or 2020 are automatically registered for the Extended Tax Credit. Families who do not file taxes can go to childtaxcredit.gov to fill out an IRS non-filer form to receive their payments.

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