The IRS has issued updated instructions for claiming stimulus funds from last year. Funds from the extended Child Tax Credit, particularly.
As a component of the Biden administration’s American Rescue Plan, the child tax credit was raised from $2,000 to $3,600 per kid for those who are in the age group of 5 and below, and $3,000 for those aged 6 to 17. 50% of the credit, $1,800 or $1,500, was paid in $300 or $250 installment payments per kid from July 2021 to December 2021. The rest of the amount can be claimed in 2022 when filing taxes for the year 2021.
The IRS Commissioner Chuck Rettig added that they don’t want anybody to ignore the Child and Dependent Care Credit, one of the essential tax credits accessible to families. They advise families and anyone eligible for this credit to check the requirements thoroughly to ensure they derive the maximum amount available. They further encourage tax professionals and others to circulate this vital information.
Several caregivers got a share of their extended child tax credit in monthly payouts, but the remaining must be claimed upon filing, even if they don’t have to file a tax return.
The IRS has issued a few guidelines on who qualifies to receive the benefits. The IRS states that the individual can be claimed if:
- They haven’t reached the age of 18 years by January 1, 2022.
- They are the son, or daughter, or any descendant of the taxpayer.
- In 2021, the child did not contribute more than half of their own support.
- In 2021, the child either did not file a joint tax return with their very own spouse or did so just to seek a tax refund.
- The kid was a resident or native of the United States.
The exact guidelines can be found here.
Child and Dependent Care Credit
Another update was a notification of the Child and Dependent Care Credit, which was extended for 2021.
According to their earnings, taxpayers may be eligible for a credit of up to 50% of qualifying childcare expenses. The maximum acceptable spending for this credit for the tax year 2021 is $8,000 for one eligible individual and $16,000 for two or more qualifying people.
The credit is not available to taxpayers who earn more than $438,000 in adjusted gross income.
For various other eligibility criteria, click here.