There are important tax changes coming this summer for families. Specifically, the child tax credit will enable families to get advanced payments. This is a change from prior years where the credit was calculated and paid out at tax time. The credit is not a new credit, but rather it’s an enhanced credit as part of President Biden’s American Rescue Plan, signed into law in March 2021.

The purpose of the child tax credit is to help lift families out of poverty, but like many tax provisions, it can be complicated.

In today’s episode of the Taxgirl podcast, Kelly is joined by Elaine Maag and Professor Francine Lipman to explain the 2021 tax changes for families, especially the child tax credit. Elaine is a Principal Research Associate at the Brookings Institution Tax Policy Center, where she studies income support programs with a particular interest in how tax policy supports low and middle-income families. She is a member of The Tax Policy and Poverty Research Network, and a member of The National Academy’s Insurance Panel on assured income. Professor Lipman teaches tax courses at the Boyd School of Law, UNLV. She has previous experience as an accountant, a lawyer, a teacher, and a scholar. She is an elected member of the American Law Institute, The American College of Tax Counsel, and The American Bar Foundation. Professor Lipman is also an Editor and former Committee Chair for the tax section of The American Bar Association.

Listen to Kelly, Elaine, and Professor Lipman talk about the child tax credit:

  • What is new about the child tax credit, how is it different from the credit we know and love from years prior?
  • The credit will be paid half in advance and then reconciled on the return.
  • How will this change affect families that don’t traditionally file a tax return?
  • How to get in touch with the IRS regarding the change.
  • In terms of the new advance monthly payments, do we know what will happen if those payments don’t start even when you’re entitled to them?
  • The IRS will be creating a separate user portal to update personal information.
  • Does the IRS know how it will be handling disputes regarding who gets to claim dependents with this change?
  • If your income is under $40K annually and you’re a single parent, you’re probably within the safe harbor. 
  • How many of these changes apply only for 2021, and which ones are here to stay?
  • In the wake of the pandemic, why are some of these 2021 tax changes only temporary?
  • There’s been a lot of criticism on the tax professional side about prioritization of projects and the timeline that payments are delivered.
  • How is the IRS encouraging low income families and serial non-filers to begin filing this year?
  • In comparison to the stimulus check program, how is the child tax credit different and where does it show up on a tax return?

More about Kelly:

Kelly Phillips Erb created and hosts the Taxgirl podcast, your home for tax news, tax info, and tax policy. In each episode, she shares conversations about taxes, money, and the choices we make. Kelly is a tax attorney who works with taxpayers and tax practitioners like you every day. She helps folks out of tax jams, and hopefully, keeps others from getting into them.

You can find out more about Kelly here and you can follow her on Twitter, Facebook, Instagram, and Linkedin.

To subscribe to the podcast (it’s free!) using Apple, Spotify, or your favorite listening app, click here.

Links mentioned:

Kelly’s Website: Taxgirl
FAQs from the IRS: Child Tax Credit
Elaine: Tax Policy Center
Professor Lipman’s Bio: UNLV

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