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Modeling the 2021 Child Tax Credit in the CPS ASEC

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Working Paper Number SEHSD-WP2022-17

The American Rescue Plan in 2021 greatly expanded the federal Child Tax Credit along several dimensions. This credit has been included in the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) production tax model in previous years, but its expansion and enhanced refundability makes it likely to have an expanded impact in the 2021 Supplemental Poverty Measure. Anticipating this enhanced importance, a new item was added to the 2022 CPS ASEC questionnaire regarding receipt of the Child Tax Credit. In this paper we describe changes to the CPS ASEC Tax Model to reflect the changes to the Child Tax Credit, which includes imputing receipt and the credit amount. We then validate the tax model using information from individually linked IRS Form 1040 records, focusing on the formation of tax units and identification of dependents. Finally, we benchmark closely related advance Child Tax Credit payments against published IRS tables.

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