Summary of Findings

All of the interviewees found the increased 2021 CTC, as well as the EITC (if they received it), extremely helpful. Most had used the CTC and any other refund money they received to pay for basic needs including housing, food, and clothing. A few others had used it to catch up on old bills, build savings, or as one parent mentioned, building for the future by investing in starting a new business. Some had used a small portion of the money to do something special to bring joy to the family such as go to the movies or get their child something special. The monthly payment was particularly helpful to some of these parents as it allowed for a steady stream of additional income throughout the year rather than just at tax time.

However, accessing the Child Tax Credit and other credits wasn’t straightforward for everyone. Across the board, regardless of income or education level, most people found some aspect of the tax filing process or terminology confusing. Most interviewees did not know exactly what credits they had received, which they were eligible for, or exactly how much they should claim. Even using the same online search terms, people who completed our user testing encountered a confusing plethora of different tax tools, some of which claimed to be free but weren’t. Even the most tax savvy interviewees weren’t always clear on which filing tools they could use and which they weren’t eligible to use. Parents of small children often were new to the process and didn’t have much extra time to solve any issues that arose in filing. People with housing instability, immigrants, people in complicated custody arrangements, and non-parental guardians faced extra challenges in claiming their tax credits.

Most people, even those who felt confident in their tax filing ability, expressed some level of nervousness about making a mistake. This was mitigated by finding help in some way. Many had asked for help from a friend or family member who worked for a tax preparation service or was more knowledgeable about taxes. Quite a few mentioned that they would like to hire an accountant or have a paid service in the future when they were making more money to ensure they weren’t making any mistakes on their taxes.

However, several interviewees had experienced some type of problem with a paid preparer or online DIY tax preparation programs¹ in the past. In fact, several of the people we spoke with had a paid preparer make an error on their taxes at some point and lost money as a result, or they had themselves made an error using online tax preparation software. A few people had an extremely bad first experience filing taxes with a paid preparer which left them apprehensive. Two had filed taxes for the first time after working a W-2 summer job for youth and strangely ended up owing a great deal of money. These experiences of tax return errors with tax preparers left the interviewees frustrated and perplexed. They sought out professionals to ensure their returns were properly prepared, but ended up in exactly the situation they had tried to avoid.

However, there were a number of improvements and bright spots that made it easier for people to claim their credits over the last few years. Everyone we spoke with found the new online filing tools, including the free IRS non-filer tool made available during the pandemic, and GetCTC.org helpful. Even those who weren’t eligible for using these tools found them attractive and were interested in using them to make tax filing easier. In addition, having more nonprofits and municipalities share resources and information and take time to help people solve challenges related to filing for taxes made a huge difference in ensuring more struggling families were able to claim their much needed tax credits. A number of people noted that just having a family member to ask or being able to get live help on a simple question from a VITA volunteer or through a paid online tax preparation service was incredibly helpful and made the process much quicker and less stressful.

The specific experiences of lower-income families who don’t normally need to file and parents of small children follow. It should be noted, however, that many of these barriers are also experienced by those outside of these specific experiences.

Around half of our interviewees and bloggers had earnings below the filing requirement threshold and as a result aren’t required to file, but may. Many of the nonprofits we spoke with had focused much of their help on very low-income individuals who fall into this group. Because the majority of people who are eligible for but don’t claim their CTC or EITC fall into this group, the pain points they encounter are important to address.

Comfort level and familiarity with taxes varied for this group. Some were very comfortable doing taxes and had even helped others with them. Some chose to file taxes because as parents they knew they could get larger refunds. A few avoided doing taxes out of fear or apathy. Some were so confused by tax terminology and processes that they avoided doing them whenever possible for fear of making a mistake and being fined or even jailed. Most who did file had asked for help from a friend or family member or used a paid service to make sure they didn’t make any errors. Most wished they could just ask a question here and there or have someone just look over them to make sure they had done them correctly since their taxes are relatively simple.

The majority of lower-income individuals we spoke with found the new simplified filing tools a welcome change, although there were remaining barriers to usage. One of the primary challenges among very low-income populations was the identity verification process itself. Among the non-filer population, many filed intermittently or not at all and as a result couldn’t answer verification questions such as last year’s Adjusted Gross Income. Others who had moved around due to low-paying jobs, domestic violence, or natural disasters such as flooding had lost past paperwork or simply couldn’t recall years-old questions used to prove their identity through the IRS ID.me process.²

Nonprofits helping very low-income people claim their CTC and stimulus checks noted that it was very common for people to not have an email or picture ID or to have had their identifying documents stolen or lost, particularly among the homeless population. For both homeless individuals and young adults who were formerly in foster care, it was fairly common for them to be fraudulently claimed as a dependent by someone else. This made it more difficult for both of these groups to use the online tools released by the IRS and Code for America.³ As a result, some were unable to verify their identity to use either the non-filer tool or GetCTC.org. Both of these challenges added many extra steps to the process of claiming tax credits. For many people in these situations, this required extensive one-on-one help from case managers or other social service agency staff to help them spend hours tracking down the documentation they needed and navigate the process to submit their returns or use the non-filer tool.

Using computers or smartphones to claim stimulus checks or the CTC was a major barrier during the pandemic, especially for very low-income individuals, those in rural areas, and among the elderly. Some people had received free government cell phones, but long call waiting times with the IRS, poor internet, or problems with usability meant they were unable to get help or file a tax return using the limited data or minutes of the cell phones.

The process was particularly confusing and fraught for immigrants and refugees. Getting an appointment to obtain an ITIN in order to file taxes was incredibly difficult. Even in a city like Chicago, there was only one designated organization to take ITIN applications, so getting an appointment took a long time. The process also left them feeling vulnerable since they had to send off their only identifying documents without any sense of when they might receive them back.

These situations made it particularly difficult and time consuming for nonprofits deputized during the pandemic to help struggling families receive their CTC or other tax credits. For particularly difficult cases, people were often referred to a local VITA. Several noted their appreciation for access to the free help from VITA, but finding a nearby location or getting an appointment could sometimes be an issue. This was particularly true for those in rural areas, with complicated tax issues, or with disabilities. One mother in Chicago who had been wrongly claimed as a dependent by a family member for years and has not received her CTC or stimulus checks as a result mentioned how difficult it was to find help through the local VITA or Low-Income Taxpayer Clinic (LITC) to resolve her situation. While VITA is a vital government program, its current capacity continues to be limited, as it is reliant on volunteers and local sites may have limited services for part of the year.⁴ The available options and services simply don't fit the need.

In our interviews, user testing, and conversations with nonprofit staff, we found that low-income parents of children under three faced specific challenges. Because many of them were new to filing taxes, they were less aware of what needed to happen and had extra barriers to filing. With active small children around, it was harder for them to keep track of paperwork or deal with any problems that arose during tax filing. Some were generally overwhelmed by raising small children and working. Because they were new to claiming the Child Tax Credit and the Child and Dependent Care Credit, they often didn’t know how much they should claim and whether they had received all the credits they should have. Even if they had claimed the Earned Income Tax Credit before, the amount they were eligible for changed drastically once they had children, so they were generally unsure if they had even received the money they should have until they had filed with children for a few years. Parents of young children were generally more confused about the difference between the CTC and EITC, how much they should receive for each, and whether they might have to pay back the advance monthly CTC. Ten out of the 12 parents or guardians of children under three we spoke with were confused in some way by these credits.

Grandparents or other family members who are the primary caregivers of small children face additional challenges in claiming their CTC or EITC. Proving that their grandchild lived with them permanently required extensive paperwork and days of extra work, even if their adult child lived in a different state and was willing to confirm that the grandchild was being cared for by their grandparent. This was even more difficult if the parent wished to receive the tax credit despite the fact that the child did not live with them.

Grandparents or other family members who rely on social security or disability income are often not eligible for the CTC or EITC even if they are the only one raising the child and they are low-income. For those who are well enough to work outside the home part-time, sorting out how much income they can make before losing their disability benefits and whether they can claim the CTC or EITC is confusing. Deciding who would claim the child even when the child lived with the grandparent full-time caused tension and frustration among family members. Despite caring full-time for the child, grandparents or other family members felt that they had to be somewhat dishonest on IRS forms to claim the tax credits they should have received since forms are often designed only with nuclear families and biological parents in mind.

Most of the parents of children under three we spoke with really liked the look and approach of GetCTC.org and found it a huge improvement. A few had used it themselves. Some we talked to earned too little to be required to file taxes previously, so using GetCTC.org or the non-filer tool for stimulus checks were a great option for them. However, an extra challenge arose because they didn’t have a previous Adjusted Gross Income amount or know their previous year’s exact income. Nine out of the 12 parents or guardians of small children we spoke with had at least one simple question about using the GetCTC.org page. Some were answered by the question sections, but others would benefit from a live chat. Some didn’t realize that by using GetCTC.org they would have to take additional steps to get the remainder of their CTC and their EITC.

“I wish there was a way to know immediately if you filed taxes correctly…there was this meme that I saw going around…the government says you have to file taxes and then the person is like ‘Okay. Well, how much do I owe you?’ and the government says, ‘Oh, you have to figure that out for yourself.’ And then the person's like, ‘Okay, well, what if I get the wrong number?’ And then they’re like, ‘Well, you go to jail.’”
– Tonya, 33, veterinarian tech, 2 small children, $25–35k annual income

For many of the people we talked to, a number of things made it much easier for them to file taxes and claim their CTC or EITC. These elements were common across the various groups we spoke with who succeeded in filing taxes and claiming their credits. These tipping points also span across the different income levels and races and ethnicities we spoke with and include factors that made a difference for people who received assistance from nonprofits. These tipping factors should be taken into consideration as the federal government and states create new methods and processes in order to help people access their tax credits.

• Multiple sources of information, one trusted authority: It was very common for parents of small children to learn they were eligible for the CTC or EITC through word of mouth, particularly family or friends. Many heard about the CTC expansion through social media and the news. However, rumors were common, so many people used the IRS website to double-check accuracy. Having clear information for a variety of reading-skill levels is essential on the IRS website and social media outlets.
• Simplified filing: Nonprofits reported that many low-income individuals who normally struggle to claim their tax credits were able to claim one for the first time using the web-based IRS non-filer tool because it was so simple to use once they proved their identity. Both GetCTC.org and the IRS non-filer tool made it easier for parents of babies and toddlers who aren’t as familiar with the tax process to claim their tax credits and stimulus checks, some for the first time. People who weren’t eligible to use it were also very interested in using the simplified tool.
• Clean, clear design: All of the people who completed user-experience research through an interview or blogging exercise on GetCTC.org loved the friendly, uncluttered design and found it helpful to have such a simple, clear approach to filing taxes.
• Auto-entry: For many, having a website that kept previous documents and tax information (including Adjusted Gross Income) and estimated their potential refund made it much less painless to file. In an IRS or state taxes tool, this would reduce errors and fear of making errors among filers.
• Step-by-step approach: Having an online, tax filing tool with simple, clear language that walked them through each step and asked clear questions to collect the answers to each item was very useful for most people who had used an online tax filing software, GetCTC.org, or GetYourRefund.org.
• Immediate feedback: Online tax filing tools which showed people exactly what they had missed or made an error on and provided an immediate refund estimate made it much easier for people to file and claim their credits.
• Additional information section: People using GetCTC.org found the additional questions and information section incredibly helpful. Having an attractive page with lots of white space but the option to click for more information made the return process less overwhelming, while also addressing questions immediately.
• Personal assistance: Most people, even those who are very confident in their tax filing ability, needed some type of personal assistance. That ranged from just being able to ask a real person a clarifying question about wording on a form to walking them through getting missing identification papers or contesting when they had been fraudulently claimed as a dependent. Two types of help were particularly useful.
  • Rapid, personal assistance: Because American taxes are particularly complicated, people inevitably had questions, including simple questions about terminology. Some people asked friends or family who do taxes for a living or know more about them. Participants could tell fairly quickly if a live chat was actually a live person or a chatbot. Many people valued and were more likely to choose an online tax-filing tool featuring a live chat with an actual person to answer questions that arose during filing, than one with a chatbot.
  • In-depth, personal assistance: A key tipping point for struggling, low-income people was getting one-on-one assistance to figure out how to resolve confusing tax situations or bureaucratic hurdles. For some, they were able to get through on the IRS helpline and get their questions answered, although wait times were long. Others were able to resolve complicated issues or figure out how to resolve issues with ID.me with help from a VITA site or trusted local nonprofit or municipal social worker helping people receive one-time assistance during the pandemic. Having trusted nonprofit partners available to help allowed some people who desperately needed their credits to claim them for the first time. For those who could afford it, getting an accountant or paid preparer made them feel slightly more confident that they wouldn’t get into trouble with the government.