Even a typical filing season brings up many questions for taxpayers, such as, “How big will my tax refund be?” or, “Will I have a balance due when I file taxes this year?” But the 2021 filing season will be far from typical—in addition to normal compliance challenges, taxpayers will also be affected by many of the provisions in the various COVID-19 relief legislative packages, including three rounds of direct payments, a new exclusion of $10,200 of unemployment income, and a significant, but temporary, increase to the Child Tax Credit (CTC) and Earned Income Tax Credit.
These new policies introduce several new wrinkles. Typically, taxpayers would owe taxes on their unemployment checks but a provision in the American Rescue Plan drastically changes what those individuals and families owe. Taxpayers will not owe taxes on their direct payment, but each round of checks has its own unique structure and amount. Also, important questions exist around the advance monthly payment of the CTC.
These changes, and others, have raised additional questions in the minds of many taxpayers and could potentially affect their refund and liability in the 2021 filing season. It should also raise important questions for policymakers. Is the tax code too complex? Is it the best vehicle to deliver direct aid? How can the code be streamlined to reduce compliance burdens for taxpayers and administrative costs for the IRS?
These questions and more will be answered by our all-star lineup of tax professionals, hosted by the Tax Foundation. Our lineup will be moderated by Tax Foundation president Scott Hodge and feature:
- Kathy Pickering, Chief Tax Officer, H&R Block
- Nina Olson, Executive Director and Founder, Center for Taxpayer Rights
- Erica York, Economist, Tax Foundation
Join us on Thursday, May 20th at noon ET for a timely virtual discussion to learn more about these topics and what taxpayers should expect for the upcoming tax season.