Mar 12th, 2021
The American Rescue Plan has now been signed into law. It includes an expansion of the child tax credit for 2021. That plan expands the age for qualifying children to include 17-year-olds. It increases the credit to $3,000 per child for many families (with $3,600 being the amount for children under age 6). The $2,500 earnings floor is removed and the credit will be fully refundable. Finally, half of the credit will be paid in advance by the IRS making monthly payments to families from July to December 2021.
In this episode, I touch on the child tax credit expansion and discuss the IRS role in distributing those payments of the credit in 2021. The child tax credit and the earned income credit are times that the IRS is in the role of benefits distributor. That is a change for the IRS from compliance enforcement. I look at the dichotomy as the IRS faces their pivot from one role to another. What will their approach be for the future?
Note: As of the recording, the American Rescue Plan had not passed into law yet.