The approaching start of the new year raises various questions about filing taxes and obtaining credits that can continue to help families survive in the ongoing pandemic. “Being a parent is tremendously rewarding, but it also comes with the challenge and responsibility of supporting and educating a child,” comments Philip L. Liberatore, CPA, a California-based provider of accounting, tax, and financial management services. “Fortunately, the tax code incorporates numerous ways of easing a parent’s financial burden.” Introduced in the American Rescue Plan Act (ARPA) of 2021, the Advanced Child Tax Credit (CTC) granted eligible families monthly payments to assist in raising children under the age of 17. The first half of the tax credit comes from those payments, while the second half can be claimed on the 2021 income tax return, according to the Internal Revenue Service (IRS).
The CTC payments have been terminated for the time being, but some qualifying families that did not receive theirs can still apply, explains Philip Liberatore, founder and president of Philip L. Liberatore, CPA. The IRS has simplified the process for taxpayers who need to take advantage of these benefits. Those who have unpaid state or federal debt or have never filed taxes before can still apply. If families who had previously filed taxes claiming a child tax credit in 2019 or 2020 did not receive a payment between the months of June and December, the IRS might have encountered a technical error stemming from a change of address or updated banking details. As a result, these payments may still arrive later. To obtain the latest information on CTC-related matters, families should check the Child Tax Credit Update Portal on the IRS website. Those who are eligible but did not sign up for monthly payments can still receive the full $3,600 per child by filing their 2021 tax returns. More information on the Non-filer Sign-up tool, eligibility, and new developments is available on the IRS’ Advanced Child Tax Credit page.
After six rounds of CTCs, studies have revealed that the tax credit has helped lift families out of poverty. In November 2021 alone, the CTC payment prevented 3.8 million children from living in poverty and contributed to reducing child poverty overall by 29.4% compared to a monthly poverty rate without the program, according to a study from Columbia University’s Center on Poverty and Social Policy. Moreover, it does not hinder the receipt of other benefits that may apply, such as the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). “These payments do not count as income for any family,” as stated by the administration. Furthermore, the CTC has helped families remain employed: in a survey conducted by Humanity Forward, 94% of the respondents said they were able to keep working because of the CTC payments.
Philip Liberatore, a veteran CPA and entrepreneur, started Philip L. Liberatore, CPA in 1988. Established in La Miranda, California, the firm offers accounting and financial advice to businesses and individuals in southern California. It provides personalized customer care, adheres to the highest professional standards, and meets the needs of its clients with a comprehensive range of services.
Philip L. Liberatore, CPA Explains the Bill that Would Allow IRS to Look into Bank Transactions: https://www.yahoo.com/now/philip-l-liberatore-cpa-explains-113000507.html
Philip L. Liberatore, CPA Reviews Proposed Measures to Help IRS Improve Tax Compliance: https://www.bloomberg.com/press-releases/2021-12-30/philip-l-liberatore-cpa-reviews-proposed-measures-to-help-irs-improve-tax-compliance