Stimulus Payment in Child Care Credit May Give Eligible Families Up To $16,000 This Year

This year’s tax season begins on Monday, January 24. After filing their tax returns, parents may expect to get the remainder of their child tax credit money, but that isn’t the only huge benefit for parents this season.

The child and dependent care credit, a separate tax incentive, has also been considerably enlarged, with the maximum effective return increasing to $4,000 for one kid and $8,000 for two or more. The maximum returns in previous years were $1,050 and $2,100, respectively.

The child and dependent care credit allow taxpayers to deduct the amount spent on a child or dependent care expenditures such as day care, babysitters, or associated transportation from their taxes.

Per CNET, parents who paid for child care in 2021 can claim $8,000 in costs for one dependent or $16,000 for multiple dependents according to a one-time increase in the American Rescue Plan Act. In addition, the return rate on child care costs was raised from 35% to 50%.

How can you claim the Child Care Credit?

To ensure that you may claim the tax break when you file your income tax return, you’ll need all of your receipts and other monetary proof. According to the IRS, child and dependent care costs must be work-related in order to qualify for the credit. According to Yahoo Finance, expenses are deemed work-related if they meet the following criteria:

  • They provide you (and your spouse if you’re filing jointly) the freedom to work or search for a job.
  • They are for the care of a qualified individual.

A dependent must fulfill at least one of the following conditions, according to the IRS:
You must have a child under the age of thirteen.

  • Be your spouse who has lived with you for more than half a year and is unable to care for themselves.
  • Be a physically and mentally incapable individual who lived with you as your dependent for more than half the year — or would have been considered your dependant if their income hadn’t exceeded $4,300 or more; or if you or your spouse if filing jointly, can be claimed as a dependent on someone else’s return.

Read more:

Stimulus Update: Stimulus Payment Can be Claimed for Deceased People

SNAP Benefits 2022: How To be Eligible for Extra $1,504 Payments?

Posted on