These COVID relief provisions are set to expire before Jan. 1

Selina Johansson

It’s not just the expanded Child Tax Credit. The end of the extra $1,600 for parents (or $1,000 depending on the child’s age) is just one of a series of COVID relief provisions set to expire this week.

The expanded Child Tax Credit was implemented for one year as part of President Joe Biden’s American Rescue Plan, though many Democrats want to make it permanent. They plan to revisit the issue in the new year as part of the Build Back Better act, stalled after key moderate Sen. Joe Manchin (D-WV) recently said he’d vote no on the bill.

The expanded CTC is one of about 30 expiring tax provisions ending this week, according to the Tax Foundation.

“There are much larger provisions expiring this year than there would be in most years,” says Alex Muresianu, a federal policy analyst at the Tax Foundation who helped put together the list. “That’s mostly because a lot of these things were sort of always intended to be temporary COVID relief.”

U.S. Senate Majority Leader Chuck Schumer smiles from behind a mock U.S. Treasury check as he holds a press conference on the expanded Child Tax Credit payments at the U.S. Capitol in Washington, U.S., July 15, 2021. REUTERS/Kevin Lamarque

U.S. Senate Majority Leader Chuck Schumer smiles from behind a mock U.S. Treasury check as he holds a press conference on the expanded Child Tax Credit payments at the U.S. Capitol in Washington, U.S., July 15, 2021. REUTERS/Kevin Lamarque

Congress’s Joint Committee on Taxation also tracks expiring provisions. In a document prepared at the beginning of 2021 before passage of legislation like the American Rescue Plan, the committee listed 25 expiring tax provisions this year and many more in the years ahead.

Changes to the Earned Income Tax Credit

Two provisions — expanded versions of the Earned Income Tax Credit as well as the Child and Dependent Care Credit — are also set to revert in the new year.

The expanded Earned Income Tax Credit will largely be received in American pocketbooks during the upcoming tax filing season. However, the impact of the reversion will affect Americans’ tax filings in 2023.

Likewise with the Expansion of the Child and Dependent Care Tax Credit, a provision for childcare and other dependent expenses, which will also largely show up in forthcoming federal tax returns but then be dropped for 2022 returns if the reversion goes into effect. Researchers have credited the expanded credit with leading to a drop in child poverty and food insufficiency.

The impact of the Child Tax Credit reversion could be felt more immediately as the Internal Revenue Service delivered the last monthly payment in mid-December. Still, while no checks will be mailed out on Jan. 15, parents will receive some remaining Child Tax Credit funds at tax time.

The Build Back Better plan would have extended both the Child Tax Credit and the Earned Income Tax Credit for another year. However, Congress could take action in 2022 and make any changes retroactive.

Changes to charitable contributions and to research & development

Also going away next year are some provisions around above-the-line charitable contributions as well as the recent temporary suspension of some limits on individual deductions for charitable donations.

Those provisions came from the CARES Act signed into law by then-President Donald Trump in 2020.

Other provisions expiring at the end of 2021 will affect businesses. The American Rescue Plan extended the Employee Retention Credit for small businesses through Dec. 31, allowing businesses to offset COVID-related losses by up to $7,000 per employee per quarter.

The Tax Foundation also offered a rundown of provisions expiring from the 2017 Tax Cuts and Jobs Act. Muresianu noted that one of those provisions related to the expensing of research and development could be significant. 

“Forcing businesses to move from expensing, R and D to spreading deductions out over five years would create a bias against R and D investment,” he argued.

One additional deadline this week is over at the Federal Reserve, where the central bank’s temporary U.S. dollar liquidity swap lines with central banks around the world is set to end. The arrangements were first announced in March 2020 and were intended to “ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses,” according to a Fed statement at the time.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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