 My name is Cynthia Gordigua and I'm ProPublica's Marketing Director. Welcome to what Georgia needs to know about taxes in 2021. Tonight's event is sponsored by McKinsey & Company and co-presented by ProPublica and Code for America. For those new to us, ProPublica is a non-profit newsroom dedicated to investigative journalism. We're currently growing our coverage of the South, so it's great to be in conversation with Georgia tonight, as well as folks outside of Georgia, because I know there's some of you here as well, so hello and welcome. And Code for America is a civic tech organization that uses technology to design equitable government services. They operate GetYourRefund.org, a national coalition that provides free tax filing assistance to low-income families. Today, we'll talk about both our country's broader tax system and the tax filing process. And to help guide us through this, we are joined by David Newville, who is the Senior Program Director of Tax Benefits at Code for America, where he oversees GetYourRefund.org, which I described earlier. David previously served as Vice President of Policy and Research at Prosperity Now, a non-profit focused on building financial security for working families, as well as a Senior Policy Advisor at the U.S. Department of the Treasury. Denise Eckley is a career center manager at Goodwill Industries of the Southern Rivers based in Columbus, Georgia, which, among other programs, provides free tax services. In Denise's role, she oversees programs that provide access to resources, education, career information, and financial services. And joining us shortly will also be joined by Elizabeth Muresca, who's a clinical professor of law at Fordham University. Oh, right on time. Oh, well, she'll be back. Elizabeth Muresca is a clinical professor of law at Fordham University School of Law and the supervising attorney of the school's tax clinic. She specializes in federal law controversy and litigation against the IRS. She has advised clients, attorneys, and policy makers on tax issues which arise in consumer matters. So thank you all for joining our panel tonight. One note for the audience. This session is not designed to give advice about your personal tax or financial situation. Rather, it's intended to provide resources and information to clarify what's an often confusing tax filing system. And also, this session is being recorded and the link to the video will be emailed tomorrow with everyone who registered. But to kick us off tonight, we will first hear from ProPublica reporters who have reported extensively on the tax prep industry and the IRS. So to provide context about the systemic issues that make taxes so complicated in the first place, you have a brief video that summarizes their findings across four key areas, about 10 minutes. Before I turn that video on, I wanted to ask our panelists if you could just turn your cameras off so that I can share my screen and you won't see them in space in the corner. That's great. And I will get the video queued up one moment. Hi, I'm Justin Elliott. I'm Paul Keele. And I'm Lydia DePellas. We're investigative reporters at ProPublica covering business, economics, and politics. We're here today to talk to you about tax filing services, the IRS, and what you can expect during this year's tax filing season. We'll talk about a reporting from the past several years on these issues as well as information you need to know for this year. The modern history of how we do tax prep in the United States really begins about two decades ago, late 90s, early 2000s around the turn of the millennium. And that was a period in which more and more Americans were getting personal computers. People were getting onto the internet. And everyone at the time filed their taxes using paper forms. But there were people inside the government who were thinking a lot about the potential of the internet. And there was a proposal actually during the early years of the George W. Bush administration to get the IRS to create a new online electronic tax filing system. And the idea was, this was going to be a free option that any taxpayer could use, made by the government, an alternative to sending in the paper forms that everyone had been doing for so many years. Intuit this Silicon Valley company that makes TurboTax. At that time already had a very lucrative business selling TurboTax software. And immediately when the Bush administration put forth this proposal to have the IRS create a government free tax filing system into it, and the rest of the tax prep industry saw this as a potentially existential threat to their growing tax prep business. The companies embarked upon a very aggressive lobbying campaign that was ultimately successful in beating back this free IRS tax filing proposal. The way that they killed the proposal was they basically made a deal with the government. This was sort of an early public private partnership in technology. And the it's called the free file deal. And the basic deal going back to the early 2000s was the tax prep industry led by Intuit promised the government that they would offer a free version of their software to most Americans. And in exchange, the IRS had to promise never to create its own public tax filing option. This free file option as it's called was available to most Americans. But the story of the 20 years since this deal was made is a story of the tax prep industry led by Intuit, taking steps to make sure as few Americans actually use this truly free option as possible. So that's the history of sort of how we got to where we are today. The situation that Americans find themselves in today when it comes to tax prep is if you go on to Google and type in File My Taxes or File My Taxes for free, you will be bombarded by advertisements from Intuit for their product, TurboTax from H&R Block from a whole host of other companies offering what are advertised as quote unquote free tax filing options. The fundamental trick that the industry has been playing on American tax filers for many years now is that there are two different free versions of the software and one is actually free and the other often leads you to pay a fee. So the truly free option is called IRS Free File. It's a .gov website. But on the other hand, there's a whole host of commercial products. The biggest one is called TurboTax Free, which are actually very different than IRS Free File. If you are one of the people who ends up clicking on a link for TurboTax Free or H&R Block Free, essentially what happens is depending on your specific tax filing situation, if you have certain types of tax forms, certain types of income, for example, if you're, let's say an Uber driver and you have 1099s that you get as part of your Uber income, suddenly if you are in TurboTax Free version after you've put in a lot of your information, you've been spending a lot of time with the software, TurboTax will suddenly tell you actually to file this form, you have to upgrade to TurboTax Deluxe which might cost $100 or maybe you have to upgrade to an even more expensive version of the software. And what we showed in our reporting was that there's literally millions of Americans every year who are getting caught by this fundamental trick where they're clicking on an ad or product that's labeled as free, but then they get three quarters of the way through the process and suddenly they realize they have to pay to finish. Even though these same people, if they had just found the right IRS site, the free file site would have been able to file actually for free using basically the same software. There was an Inspector General report that looked at this issue after our reporting a couple of years ago and the Inspector General found that 14 million Americans in 2019 at least had paid for tax prep that they could have gotten for free through the free file program. So if you're looking for the truly free tax prep option try to find the IRS free file version. You should start on a .gov site. So a lot of our reporting for the last couple of years in the IRS is focused on the fact that the IRS has been starved of resources for the last 10 years really and it's not like it was drowning in resources before that started. So what that means for people is that basic things like if you would try to contact the IRS a lot of times it's hard to even get through to talk to someone. Any correspondence of the mail is going to take months on end to resolve and what we found is that a lot of the cuts that happened as a result of basically budget cuts to the agency they have lost a lot of personnel and it's been a different story how people have been affected depending on how much income they have. So people the top of the income ladder have really benefited from this because if the IRS is short staffed what that means is a lot fewer audits are going to get done particularly people who are upper income because those sorts of audits are really resources intensive and take a really skilled agent to do them whereas people lower down the income scale often are really audited by computers. So a computer might challenge someone's claim of a child on their tax return or ask them to prove up the fact that they said they made this much money freelancing or something like that and so you get a letter in the mail and it can be pretty intimidating to deal with and then you have to deal also with the fact that the IRS is short staffed and it's hard to get answers for anything. We found there's a real imbalance in the cuts the agency's who's been impacted by that. So as Paul and Justin and probably already told you after a decade of declining funding and staffing the IRS was asked to do something in 2020 that was unprecedented probably in its history which was during a pandemic get stimulus checks out to 160 million Americans essentially overnight and what the pandemic meant for the IRS was like many federal agencies they had to shift to remote work as quickly as possible and that meant shutting down many of their processing centers but the way that the IRS still works much of it is still on paper and so you had mail coming into these processing centers piling up and tractor trailers because nobody could get there to deal with it and remember the pandemic came in the middle of 2019 tax filing season so if you filed a tax return by mail you may not have her back even yet and that causes a lot of trouble for people who normally depend on getting their dependable refunds back in a relatively prompt fashion and then later on it became important for stimulus checks so but let me go back to the summer and fall of 2020 when the IRS was trying to get stimulus checks to the people who really needed them the most and often those were folks either without bank accounts or who hadn't ever filed taxes at least recently and those people all had to be asked to file a special form and reaching all of them was really difficult so asking the IRS to cope with all these changing protocols with less money less staff less processing centers open and no extra money to do all this outreach that they were being asked to do met that inevitably there was going to end up being a cascade of problems that continue into 2021 now they're being asked to do a second and third round of stimulus checks which are getting progressively easier because they now know how to get the money out and how to find people the IRS did get another one and a half billion dollars in the most recent stimulus bill the american rescue plan in order to try to modernize their systems and boost their staffing but it's it's a paltry way to make up for 10 years of declining funding and it doesn't look like the problems are going to get much better just with that on an ongoing basis okay so we're back and the panelists you can turn your cameras back on so I know that ended on kind of a bummer note but don't despair there are resources and information to help you navigate all of this for one pro publica has published a free tax guide that's full of free back checked tax information and I'll drop a link to that in the chat box for everyone to have but we also have this great panel here to share this information and by the way if you have a question for a panelist at any time you can type it into the q&a box I see some we already have at the bottom of your screen and you've also received questions in advance that we'll get to but first I have a few questions to get us started um so at pro publica we found um but a lot of people don't know where to turn when they have questions about their taxes in addition to the irs free file system that the video discussed what are some free tax prep options that you've had experience with and david we'll start with you for this one thank you synthia um and let me just say it's great to be here uh and partner with you all on behalf of code for america and get this information out tax season is confusing uh and can be intimidating normally but this year in particular both with the pandemic and all the changes to tax law that happened last year uh and this year make it even more intimidating and more important to have resources like this out there for folks to get their questions answered so very happy to be here in terms of free tax prep resources there are a number of very good free trustworthy sources where you can get your taxes done one of the main ones is the volunteer income tax assistance program which can help folks who make under $57,000 a year roughly and through get your refund also you can access vita services and other options and for anyone under $66,000 a year can access these services to get their taxes done the irs um the volunteer income tax assistance program it's a it's a joint program with the irs uh that's overseen by the irs but run by nonprofits that do uh tax prep with highly trained volunteers that show up every year there's also uh tax counseling for the elderly or tce which specializes in helping older americans those 16 older who need help with their taxes especially those with um you know particular issues around pensions and other issues that can be helpful there and then there's also a service called myfreetaxes.com run by united way which allows individuals to kind of do taxes on their own to prepare them themselves diy uh and then as we heard in the video there's also um you know the free file program which can be a little more confusing as we know um based on the video you know depending on who the provider is it's another public private service with the irs depending on uh the private provider tax prep provider can be confusing about eligibility levels it roughly goes up to $72,000 a year anyone under that can access it but again the complexity of your tax returns all those other features can limit your access um to that so it can be a little bit confusing and then the only other one I would uh flag that doesn't really have an income limit but is available to all americans who uh at least want to do their federal income tax for free there's a service also in the irs can be confused with free files called free fillable forms it is basically like doing a paper tax form yourself if you're that adventurous person but you can do it electronically um which this year I would emphasize more than ever you don't want to do a paper return as you mentioned Cynthia you know because of the pandemic there's such a backlog at the irs being you know under resourced and having the socially distance like all the rest of us you know um uh you know who are able to do that through our work so you know those folks you know defile for paper would greatly delay your returns this year but you can go on and use free fillable forms that's basically the 1040 tax form but you can fill it in electronically submitted electronically but those those that's not an exhaustive list of all the options out there but it kind of shows you a variety of different services are available and I will say this too you can go to both the irs's website or to get your refund.org and use the vita locator tool to find a vita site that's near you you can also access my free taxes through getyourrefund.org or use the getyourrefund.org service to be connected to a local provider to do your taxes uh at a distance to do it virtually and use the service that way so those are some of the main options I would highlight and did Denise or Elizabeth want to add anything to that answer? The only thing I would add thank you Cynthia is that there are still face-to-face options out there as well it's not all virtual but in most cases you'll want to make an appointment because the socially distance and sterilization of sites is still critical and we're keeping up with those sorts of things and the app that David mentioned IRS to go you can find where those locations are. Great. Okay so with the pandemic we saw of course widespread job losses and a spike in people filing for unemployment and ProPublica gets a lot of questions about this just like generally what are ways that unemployment insurance will affect people's taxes for example do you have to pay taxes on it what should people expect to are sort of in the system for the first time and Denise I'll throw this one to you. Thank you Cynthia. So I think the really important thing when you look at this awesome question is the fact that the American Rescue Plan Act of 2021 had a piece of it that allows for ten thousand two hundred dollars the first ten thousand two hundred of your unemployment to not be taxed in 2020 and you can actually go to see at the IRS website and other sites if you google it lots of states have have fallen suit and they're actually participating as well the state of Georgia happens to be one of the states that is still taxable so I know the big question is this I've already filed I had unemployment what do I do there are multiple multiple news media releases as well as IRS releases stating do nothing at this time there are lots of folks you're saying but I need to file an amendment I need to file an amendment there's enough information out there to be dangerous and the reality is until there is further guidance on what to do don't do anything if you've already filed the good news is if you haven't filed things like tax layer get your refund other resources that are available for free have in fact been updated to take that into account so that can be that can occur as well and should you choose the age old paper filing option there's a form out there as well that the IRS has made available or you would do a calculation worksheet to show what you owe money on and what you don't own money on to remember it's just the first 10,200 okay so what about people who took on gig work to replace lost income during covid like driving uber for example how does that affect how their income is now classified for their taxes and elizabeth can you take this one for us okay hi everyone um so if you get um if you work in a situation where you're not getting a w2 you're considered to be self-employed and when so you get a form that it might be a 1099 or something that looks like a 1099 it might say 999nec it might say 1099k but that basically means you're self-employed and when you're self-employed it it technically means you're carrying on your own trade or business so you have to file your own trade or business return which is what we call a schedule c so you have to file with your tax return a schedule c reporting that what i'm going to call gross income the amount you've got and then you're able to deduct expenses that you invested to make that income so and then when you file a schedule c and you're self-employed you're not only liable for income taxes you're also liable for self-employment taxes and that might be something you weren't aware of um but we'll get to that a little bit later so if you're filing a schedule c and you're an uber driver or maybe i'll use lift or door dash or something like that one way you can um determine what your expenses are just use a mileage expense if you go on irs.gov or really just google what is the mileage deduction um you get i haven't checked i actually should have checked it but it's i think it's 54 cents a mile um and you can deduct per mile you know let's say i do a thousand miles you could take a miles objective of a thousand miles and you could take that in lieu of actual expenses um which are usually harder to keep and harder to prove like how much gas did i use and did i pay for any tolls or did i need a break job using my car to be an uber driver mileage replaces all of that so you can take the mileage or you can take actual and mileage is easier and generally it you'll find it to be fair um the other thing so your gross income again is the amount that you received from this big employer now the issues that i've seen with uber and those other companies are that it's sometimes hard to figure out exactly how much money you got from them because they're reporting all sorts of different things so if i use an uber and i pay $27 the driver will get $27 so you want to go back into your account and download your information about exactly how much you were paid for the jobs that you did and then you want to be careful that you're download you know they're getting the right information now i would say five years ago the information that we were getting from those companies was worse and now it's a little bit better and you should be able to get some kind of year-end statement um and you may also want to just check that with your bank deposit to make sure it's correct the amount reported on some of the 1099s won't be the amount you got it will be the amount that i paid to uber so you might see that $27 included in a 1099k filing but maybe you only got 19 or maybe 12 and so you want to make sure that you're accurately reporting what you received not what uber received and if you report what uber received then you also have to deduct the amount that uber took from that $27 so um let me just keep going here with my notes i'm sorry um and again um i know may seem we're some of you but you actually are considered to have a business and be self-employed um if you have a home office you can take a home office deduction and there is a simplified way to do that um that is one of the things the iris does like to audit so um in the past few years they created like a simpler model to create a take a home office deduction um and um i don't know if anyone else wants to add anything about what kind of documents they should bring with them if they're going to a vita if they're self-employed putting anyone on the spot absolutely i will i will say one of those common things we see is a 1099 as an uber driver but no expenses and so uh someone who has struggled to find employment goes out to be an uber driver an uber eats driver and doesn't have any tracking of mileage any tracking of of receipts for whether it's car repairs or other purchases that help to make your business more effective so be sure to bring all of that information with you and to have it the first time um we try to ask folks that information but when you haven't kept it at all and you can't back up and audit that it's important that you begin to do that quickly for if for 2021 if you haven't done it so far yes let me just add there's apps you can put right on your phone and you could like it'll tell you how many miles you drove and i think actually you can also often get that information from the company so you want to be always tracking mileage and if you haven't been doing it and um you can start doing it now certainly right now today it's only March 29th you can start doing it and have better records for 2021 and you should take a deduction um and like i said you could probably estimate those miles figure out a way to come around to the number of those miles if you have a great thank you um okay so knowing your income is the first step to understanding how much one will be taxed so could you walk us through just how tax brackets actually work you know we're just getting really general information here we get a lot of very general questions um and Denise let's start with you absolutely tax brackets are so confusing there really are seven of them and probably Elizabeth could answer these better than I seven of them that affect your income and they go all the way from 10 to 37 percent depending on what your income is the most common question is that my gross income or my taxable income and how do I get to taxable income so you actually are in a qualified tax bracket based on your taxable income and one of the things that tends to happen is individuals because of overtime unemployment um other other other dollars that may have come in their their income will go up but they have not at the same rate increased their withholdings so when you get to the end of the year and you're asking yourself why do I owe more taxes this year I got six thousand dollars back last year why am I only getting six hundred this year and really being able to look at that there are lots of pieces and parts to that puzzle and it can be a really confusing puzzle which we've heard actually for the last 30 minutes how confusing taxes can be but they are things like um I maybe had a dependent that turned 17 so that changes my taxable income no longer do I get 2000 but I get 500 uh of course that will look different next year but it's not a lot different if you have a 17 or 18 year old or um maybe because lots of people didn't show up to work during the pandemic because kids were sent home quarantine I now have a ton of overtime and my I didn't increase my tax withholdings and so now I'm looking at that and and you know I've seen where individuals maybe had two-thirds of an increase in their income but their tax withholdings were the same or less than the prior year because of something that they didn't take a look at on their w4 so making sure that you're looking at that as well um another thing that could have an impact is um is maybe you had a dependent a grandchild that was on your income in the prior year or you had a foster child or you um of course we know there were itemizations that changed over the last few years and you haven't changed you haven't filed in a while so so those are all things that can impact your taxable income and easily increase your tax bracket when you're not looking great thank you okay so we understand that there are new rules for their earned income tax credit this year so um David if you could tell us what are those new rules but also like what is the earned income tax credit who qualifies for it and again what are the new rules for it absolutely yeah the income tax credit it's uh it's one of the most impactful tax credits for for working people uh who are lower in moderate income and you know there are some changes that took place this year um and the American Rescue Plan in particular is going to change the earned income tax credit for next year when folks file but for you know basically the way it works is as you uh as you earn money earned income through through work it slowly kind of phases up um and it kind of peaks and then it kind of phases out uh once you get to roughly a moderate income level um and you know uh it's it's if you have dependents if you have children um you know it can go up to a significant amount of money the highest level the earned income tax credit can be roughly around 6600 dollars and even for those who don't have dependents or aren't um don't have custody of children you know right now it goes up to roughly you know it can basically roughly be around 500 dollars but the changes in the American Rescue Plan for next year are going to greatly increase that up to 1500 approximately and more give it a big boost at least for one year possibly longer if congress takes action to do that but the earned income tax credit it's um you know it's a it's a greatly beneficial and highly impactful you know can add thousands dollars to a family's um tax refund and the beauty about it too is you many people may have heard of the idea of like a refundable tax credit basically what that means is even if you don't have a tax liability even if you don't owe the government any money to reduce your bill like a tax credit normally would you can still receive the money um on top of it um and the biggest problem with the earned income tax credit I think for most folks is you know we've been talking about how complex taxes are the earned income tax credit is is uh if not maybe not the most complex aspect to the tax code but a very confusing one and I think that's why there's a lot of issues where people file their taxes and they fail to claim it or they may improperly file it so I think that's why it's um particularly helpful to to get help from a resource like a volunteer income tax assistance program when thinking about the earned income tax credit and making sure you take advantage of that especially right now and next year in particular when it really gets an even larger boost for those who are um again like I said those who are don't have children or have sole custody of children there'll be a big boost for the earned income tax credit next year and last thing I would say too is you know even before the pandemic it with everything with tax benefits you know despite being a really impactful tax credit about one out of five people depending on which part of the country you're in but roughly overall fail to claim it so it's it's a significant source of money out there you know over 20 million Americans normally receive it but it's billions of dollars in the table across the country so you know we definitely want to encourage folks to who are eligible to claim it because it's uh it's money on the table for folks okay thank you so what if someone's having trouble with the IRS um like they can't get something sorted out or they're getting audited kind of like um reporter Paul Keele was speaking about earlier what resources can people access for problems like this and Elizabeth I'll throw this one to you okay the first thing is don't do nothing it doesn't go away if you stick it between that place between the refrigerator and the wall it doesn't magically disappear so don't do nothing it is scary nobody likes to get a letter from the IRS I don't like to get letters from the IRS and all I do is help people when they get letters from the IRS so nobody likes to get one um the first thing is honestly open the letter read the letter it'll have a deadline on it and sometimes it's it can be something very straightforward um and you may be able to handle it on your own so you try to read the letter look for the deadline if you're gonna respond to the letter on your own never send originals always make copies and always keep proof of mailing um do it certified mail just in case you want to make sure the IRS gets it let me tell you the IRS will never call you on the phone and tell you that you're about to be arrested they won't contact you by email um they still use the good old-fashioned United States Postal Service mail um and if you get something by certified mail from the IRS that means it's very serious and it has a very serious deadline and you really do need to deal with it so um like most of us we get a letter from the IRS we're scared we don't know how to respond we don't know what to do the vital site closed now because it's September um to kick back because they're still there they will try to help you but you can't go back there um Congress did another thing um like a vital site and it's basically funded hundreds of low-income taxpayer clinics they're called they're called low-income taxpayer clinics um I run one and our job is to help people with problems with the IRS so you can go on the IRS website and look for a resource um it's near you if you live in a large state um and there's not one close to you a lot of people can help you just by mail or um by telephone so you don't have to be close enough to get to the office um and what they will do is what's great about the low-income taxpayer clinics is if they can't help you and represent you and do everything for you for the IRS they will be able to tell you what you need to do to help yourself um so do look for that resource resources it is on the IRS website again it's called um the low-income taxpayer clinics it's um underneath the taxpayer advocate service part of the IRS website but again don't do nothing read the letter if you think you can handle it on your own make sure you have proof of mailing don't mail originals the IRS will get back to you um I think you probably heard at the beginning that they're very slow with dealing with mail right now in some parts of the country um people are going in and out of the office in some parts of the country they're not going into the office so things are very slow things are very slow with the IRS in general um they don't work on timeframes that make sense to regular people um so things that you think might take a short amount of time could take up to six months or a year at the IRS um but now everything is even slower so again make sure that you have um if you if you need help call a low-income taxpayer clinic if you think you can do it on your own make sure you do it by mail you don't send originals and you keep proof of mailing and then it worst comes to worst really not hearing back you can always reach out to the IRS tax for advocate service and they can see where your case is in the IRS and they have ways if it's been sitting for a long time where they can help you expedite great so piggybacking off of that um you know with regard to the backlog of paperwork at the IRS and the slowdowns um I mean are you seeing delays and tax returns already um what kinds of timeframes should people expect this year um so Denise what are you seeing so never before have I felt like I couldn't really give a true average and trust it here in in 2021 the IRS is still saying the average turnaround for an e-file return is approximately 21 days but remember that that's still going to be anywhere from two to four weeks depending on how you count 21 days what we are seeing and are seeing on a regular basis is that anyone who has had a rebate credit for the economic impact payment or stimulus as we commonly know it is that there is a delay particularly if you received one and not the other the IRS is going to ask why did we get that one to this family but not get the second one to the family what's changed what's the situation and they will investigate it's not because they don't trust you it's because they have to verify what happened to the money that they believe they already sent and that is when we're seeing the most delays um if if if there's anything at all that I can tell folks is to use the IRS.gov website and look at where's my refund so go to IRS.gov look at where's my refund equally if you want to know where your stimulus is go to IRS.gov and they're both right there on the same page where's my payment so that you can take a look at that and there are ways to look at how much they believe you received last year as well not just how much you're getting this year so that that is although I am also hearing the IRS say that they're struggling to open mail if you uh if you don't have a direct deposit you may want to consider getting a bank account that's the other thing that could delay a refund is sending it in the mail even though I know good old US mail is the way that they're doing things as Elizabeth has already said um when you receive a check it's going to be six to eight weeks at a minimum and that's without any questions along the way. Okay so with that we're going to get into um some questions from the audience now um we're getting uh several questions around the the child tax credit um so maybe first if you could explain just what that is and you know specifically uh we have a question here were families who just had a baby like say in the past two weeks to a month how will they benefit from the 2021 child tax credit um can they still change their dependent information now to qualify for the payment this year so David can you tackle that one? Yeah happy to Cynthia so yeah the child tax credit is another uh it's another great tax credit for families um it's undergone it's extra confusing I think because not only was it changed uh very recently by the American rescue plan but then also back in the 2017 folks may remember the Tax Cuts and Jobs Act there was also some changes around the child tax credit there some expansions for both low moderate income families and for higher income families but basically it's um depending on your income it can vary a little bit but it's a pretty much a it used to be a $2,000 credit roughly and now it's been expanded through the American Rescue Plan to a $3,000 credit for older kids and for younger kids six and below it's a $3,600 credit um and Congress is kind of in the American Rescue Plan layered on a new level to the child tax credit um what it's done is it's decided to do uh ask the IRS to implement something called a monthly or periodic payment that is supposed to start in July although the IRS as we have already heard has a lot of different pressures on it and pieces already so it remains to be seen if it'll be able to be implemented but what's supposed to happen is if you file the tax return they're gonna automatically enroll folks starting in July in monthly payments of this for half the credit because it's supposed to start in 2021 like the earned income tax credit expansion and folks who depending on the age of the child and the number of dependents if you're one child you get somewhere around 250 to $300 a month on a periodic basis um starting in July so the details still need to be worked out so we'll see what happens for that but roughly you know this expansion of the child tax credit folks may have heard this is you know supposed to cut child poverty in half because it went even further than the Tax Cuts and Jobs Act on the lower income half and made um essentially the child tax credit fully refundable and as I mentioned earlier refundability just means you can receive a credit even if you have no tax liability and in this case you can have no income and you can still receive the the full credit so it's great for families and really low-income families with children and really low-income families to give them this benefit but the details around this uh this periodic aspect and how it gets implemented remain to be seen so we will see the whatever happens with a periodic basis you know families will still be able to claim it next tax season um the expanded version of it those are eligible for it now um and then like I said the IRS will have more announcements later this year I'm assuming about this portal and how to register and do all that if they do announce it what I would encourage folks and as more details come out though there'll be an ability to go in and if you want to opt out update your payment information your address I would just encourage people to keep all your information current you know so if you have the custody of the child changes or you add a child to your household just make sure you go to the IRS portal once that's established this summer later and keep it current so your taxes you know uh there's no surprises for you next year thank you so we're also unfortunately receiving a lot of questions about um recent deaths and families um you know someone's spouse passed passed away this year um and they receive life insurance is that money taxable that's one of the questions you've just received uh Denise um can you take that one for us please um it really depends on the situation but yes it's income and it's it's uh and the and the one thing that that would be important as well it depends on the timing of your family member's death whether or not that individual has a final return tax return that needs to be filed as well um I'm actually I know that there are lots of laws and lots of things that when we sit in a certain situation that may have impact um Elizabeth is there anything that I'm leaving out or that you would add you were afraid I was going to ask you that question no generally life insurance is not a taxable it's not taxable to you um it's generally not taxable there are certain situations where when it's payable to the deceased person it's taxable but that's rare that's I would I would say Denise I think that that's it while it's true it's more rare than the about just going to the spouse um so again um that's a great question that you might want to um so it depends on your circumstances but generally usually it's not taxable um this might be a good point for me to bring up if you do try to go out and hire a tax professional um you always want to be wary about you know who you're hiring and what they know and whether they're an expert or not um and so the best way to hire professionals like when you hire every any professionalist how to get a referral from friends or family or even your neighbors or your co-workers to someone that they know that they've used and then you know just caveat mentor when you're talking to the person beware ask some questions make sure they've been around for a while you don't want to hire the guy who pops up on the street corner and then closes down and never comes back um and um you know again like I think um I know Vita sometimes is limited into what they're allowed to do when people come in so um this might not be an issue that they're even able to handle at a Vita site so you may end up having to use a professional um and let me just point out so much made a question about those paid software programs um you know those paid software programs can be really helpful but you do have to put your information into them so if you got to a life insurance question it's going to ask you a lot of questions and you have to make sure you're answering them correctly and then usually if you answer the questions correctly the program will get it okay um our next question is how are penalties calculated if the taxpayer owes a lot when filing their return is there a first time penalty waiver process um I'm going to throw that one to David yeah I'm happy to answer that one and Elizabeth maybe you know the better answer this one I know that uh one thing that there's a lot of confusion in particular around and we get a lot of questions uh get your refund about is around the EIPs and you know will this be offset by government debts or private debts and so forth um and unfortunately in the way that it went through congress it doesn't really help it very much because each of the EIPs depending how they went through had different levels of protections I think the second round EIPs had the most protections from different types of garnishments or offsets the first one unfortunately you know financial institutions could uh could take back parts of it for overdraft fees or for other reasons and then the third one around again they weren't able to do the same protections as they were for the second round because of the process that congress used to pass the bill of reconciliation process limited what they could include in there so you know we still encourage you know a lot of folks are saying should I file you know I know I have debts and all these different aspects is it still worth it you know uh we still encourage folks to go ahead and do the filing process and go through it because for many folks who haven't filed especially if you go ahead and filed recently and given all the benefits that have come in through during the pandemic through the CARES Act and to the American Rescue Plan and then obviously to the second round of stimulus payments it can add up to be quite a lot of money and refunds for many folks and it can still be worth it even if there are certain offsets that are involved there um Elizabeth I don't know if you have more to add or you can talk about you know yeah so when you yeah when you owe taxes to the IRS which sometimes happens like Denise mentioned a situation where maybe you know you hadn't with held properly the first thing to do is always file even though it says I'm gonna owe taxes and the second thing to do is you can set up a payment plan very easily at irs.gov and if you can't afford a payment plan you can call and tell them I can't afford a payment plan because right now I'm not employed or my income is so limited I can't afford to pay my rent and feed my kids and put a roof over my head so when you open into the IRS and you can't afford to pay you should call them up and tell them that and ask them for non-collectible status if you can't afford to pay you want to always go online and keep this way to get a payment plan from the IRS because you're allowed to charge it for them if you go online and set one up with direct debit from your bank account and as far as penalties go the IRS is allowed to obey penalties so if if you're not paying on time or you file late or you're paying late the IRS is allowed under the law to assess penalties in fact required under the law to assess penalties but there is something called the first time abatement program which you can apply through the website or by calling and also if it's not your first time you might have special circumstances um and you can still ask for the IRS to update your penalties and if you can explain to them why you weren't able to file on time or you weren't able to pay on time they often can abate those penalties especially if they're smaller amounts so it never hurts to ask there's a form called the form 843 it's like a penalty abatement form you can sort of explain your circumstances you can also call I know it's really hard to get through so when you do call the IRS you have to be really patient sometimes they put you in a queue and then they hang up on you sometimes they won't even put you in the line because the line is so long the best time to call is right when the hotline's open at 8 a.m eastern standard time I think so penalty abatement is a thing you always have to pay interest but it actually is pretty low so do again don't ignore it try to get some kind of resolution from the IRS on your own through the website or by calling the number on the notice can I add a question to that Elizabeth why is it appropriate to go after an offering compromise okay so that's a really hard question because it depends on people's circumstances but basically an offering compromise you know when you're driving in your car you probably hear these ads for like save hey penny's on the dollar for your taxes and it all seems too good to be true probably because a lot of the times it is and they will charge you a lot to do your offer compromise so if you want to do an offer compromise one of the things you can do is look at the forms on the website they're actually on the website has like a like a calculator where you can put all your information in and see if you're a good candidate if you feel your that's way above your sophistication you can try a low income taxpayer clinic and they can either help you or maybe guide you through one so offers and compromise are good for people who basically are in a financial situation where they're not able to meet their both both most basic needs and they don't have a lot of assets that the IRS would want you know want them to pay for like they have a really expensive car the IRS might say okay well that car's worth you know $10,000 so your offering compromise has to be at least as much they won't take your car but they would want at least as much as your car's worth so if you don't have a lot of assets and your income is barely meeting your monthly expenses that's a good candidate great okay our next question is about stimulus checks so what happens if a person's income from last year is different from this year's just what are the requirements for the stimulus check is that going to sort of change their situation for eligibility their their income changed so Denise I'm going to throw this one to you I honestly would have to to look at the the tax tables to see or the information that they have have put out you would have to have a significant change from last year to this year to be eligible last year and not eligible this year um and honestly that information as well is at IRS.gov and you can find all the information for the first stimulus the second stimulus and now the third stimulus that tells you exactly what your income guidelines are and what the limitations are I think one of the most the most considerable differences from one and two to three at this point is dependence and the age of dependence so if you had a 17 year old and you had already filed your 2019 taxes you were not eligible for stimulus one for your dependent and you were not then eligible for the stimulus for a dependent 17 and up on the second one however this third one no matter the age of your dependent you're eligible so there are some differences and some things that are confusing and there are nuances that that really could be different for each individual and I would just encourage you to look at IRS.gov okay thank you next question is about unemployment benefits so for those who have already paid taxes on their unemployment benefits how can they get those refunded um anyone can jump in it looks like the news has some thoughts well I think we actually talked a little bit about this earlier the IRS has said if you've already filed and you've paid taxes on that um the question it depends on if you filed or if you've not filed if you paid taxes and you have not filed the for instance the taxpayer program used by volunteer income tax assistance programs it's been upgraded and you'll be able to have that $10,200 or whatever that amount is it might only be $4,000 that becomes not taxable if you have already filed the IRS is urging you to do nothing yet until they get guidance out to tell you exactly what to do um so uh next question is about deductibles so if you do not have a business what items are still deductible are there home business medical things that people can still claim um David do you want to tackle that one this is for not for business but just regular person who wants to deduct some things yeah this might Elizabeth might be able to give a more comprehensive answer here but yeah there's a variety of items that are deductible to your taxes you know it all depends you know a lot of it depends on kind of your uh your income level like student loan interest can be deductible mortgage interest if you own a house can be deductible health expenses if you spend a certain amount if you're willing to go ahead and itemize you know for some of these you have to itemize and you have to go above the standard deduction which is quite high in most cases since it was expanded by the tax cuts and job jack but yeah there are there are a variety of other things that are deductible that are outside of of small business expenses for sure um Elizabeth did you have any anything to add to that um no i mean um a lot of the small ticket items that used to be able to deduct in the past are not deductible anymore um so any kind of employee expenses are not deductible but basically like your home mortgage your property taxes medical expenses but they do have to be quite high like more than 10 percent of your gross income um and then there's other things that like if you're a school teacher you're allowed to deduct a little bit or um supplies by um everyone's allowed to take a charitable deduction up to three dollars so there's a few things that are still sort of hanging around um from the you know from the from the tax act that they added in okay so this next question is short i'm going to throw it to elizabeth what if we didn't file last year what advice do you have for these people so if you didn't file and you need to file you should file even though it's too late you should still file um and the reason why is you never want the irs to file your return for you and they eventually might get around to it so you always want to file even if you get a letter from them where's your return then you should go ahead and file now you didn't have any reason to file if you had no money earned income at all and you didn't have a job and you didn't work and you have no income then you don't have to file but if you had um usually i i always want to say the ballpark is around 12 000 or if you had a w2 and you're entitled to get your refund you should file um you might be doing refund you should file and get it and if you owe taxes again you should still file better to file and owe the taxes than to not so um it's not too late um it may be too late to electronically file and you may have to mail in a paper return and i think we talked about at the beginning it may take a while for the iris to get to it but they will get to it eventually and process okay um another stimulus check question can you still get a stimulus payment if you haven't yet filed 2019 taxes so piggybacking off of that same problem yeah i was going to say you can absolutely still get your stimulus check you know the recovery rebate credit which is the the new credit that's been added to the tax form for this year you can claim you can still claim for the first one you can still claim for the second one um and the third one even if you haven't people should you know obviously i think most folks would like their stimulus checks sooner rather than later but people shouldn't panic even if you don't get it this year the iris has made clear that you can still file for it three years out that's another important thing to point out is if folks haven't filed for a number of years you can still file three years back and even if you're below the 12 400 for a single person under 65 the minimum requirement for filing you know with the eip's i think even if you have lower income you know it doesn't hurt to file like again even if you have offsets there's uh there's so many tax benefits out there now and you know many buddy sites with capacity can file back taxes for you as well again you know if it's paper it can take a while to receive it but the checks can be quite substantial for folks even with really low incomes given all the eip's and if you have children too with this new child tax credit benefit you know you're going to want to we're encouraging everyone to file a 2020 return if they can because that's the main way going forward to either claim the prior um stimulus payments or to access these new benefits you know it seems like the irs they had the non-filer portal that they opened up to allow people to access the the first eip originally and that's been shut down now and it seems like everything has to go through a 2020 format uh tax form full tax form at some point at least right now that could change so we just want to encourage everyone to file as much as possible so they can receive those benefits going forward and they're in the system okay well that's actually our time for tonight i wanted to remind everyone that this has been recorded and you'll receive an email tomorrow with the video as well as some of the resources that were mentioned tonight thank you so much to our panelists for such an informative discussion and to our audience for your terrific questions again look out for that email tomorrow and from all of us at ProPublica and Code4America thank you for joining us