How the Child Tax Credit Is Impacted by the American Rescue Plan,” Bloomberg Tax
In an article published in Bloomberg Tax on July 5, 2021, Founding Shareholder Bob Boyd and Beth Garrett of Frazier & Deeter co-authored an article discussing tax-related issues facing divorced parents related to the temporary expansion of the child tax credit.
The authors explain that while divorced and divorcing parents are still adapting to the changes that were enacted to the tax code through the Tax Cuts and Jobs Act in 2017, parents must also now consider a new wave of changes with the American Rescue Plan passed by Congress in March 2021. “The change involving the economic impact payments paid in 2020 and 2021 is forcing divorced parents to have to resolve the issue of which parent should receive the child’s portion of the first and second economic impact payments that were paid in 2020, and now the third payment in early 2021.”
Throughout the article the authors discuss the recent changes under the American Rescue Plan, including the changes to the child dependency exemption, child tax credit and dependent care credit. “Both the expansions of the child tax credit and the dependent care credit have only been enacted for tax year 2021 through the American Rescue Plan. However, President Joe Biden has recently introduced the American Families Plan which would keep the child tax credit expansion in place through 2025, when the original provision is set to expire, and make the expansion of the dependent care credit permanent,” the authors continue.
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