FAMILIES with kids under 13 could get a “surprise” stimulus payment of $8,000 in the form of a tax credit for childcare expenses.
The new adjustments to the Child and Dependent Care Credit for 2021 mean that working American families who hit certain requirements will pocket thousands in extra stimulus funds.
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It covers childcare costs up to $8,000, as well as costs for looking after a spouse or parent who can not care for themselves.
This increases to $16,000 in expenses for families with two or more dependents.
These child care expenses include everything from daycare to after-school programs to nannies to day camp and more.
Previously, the maximum amount you could claim for multiple children before was $6,000.
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The credit is aimed at allowing people to return to work while not facing hefty bills for care costs in their absence.
“The Child and Dependent Care Credit can get you up to 50% of up to $8,000 of child care and similar costs for a child under 13, a spouse or parent who cannot care for themselves, or another dependent so that you can work (and up to $16,000 of expenses for two or more dependents),” Nerdwallet explains.
This credit is another part of the American Rescue Plan, passed in March, and can start being claimed for this tax year in 2022.
For instance, if parents regularly use a babysitter in 2021, they will be able to claim that as a child care expense for this tax year when tax filing time comes around next year.
CNET reported that it will probably be easier to claim child care credits for people and groups working in an official capacity, such as a summer camp program or licensed daycare provider, rather than a local teen.
But the credit is somewhat flexible.
WHO IS ELIGIBLE FOR ‘SURPRISE’ STIMULUS?
Daycare before school at a city site also counts but a teenager watching your younger kids for a little extra allowance money does not.
Trying to claim anything that you’re paying off the books also isn’t advisable since that income may not be claimed by the person you’re paying.
The expenses won’t be claimed in taxes until next year, but record-keeping throughout 2021 to be prepared is your best bet.
To get the child and dependent care tax credit, the filer’s adjusted gross income needs to be less than $125,000.
Any more than that and the credits will phase out at 50 percent.
Families earning $438,000 or more will be out of luck, since that’s when the credit phases out entirely.
It comes as families will receive an additional stimulus payment from July 15 under Joe Biden’s child tax credit expansion plans.
Around 39million homeowners will get up to $300 a month for every child under the age of six as part of the American Families Plan.
These payments will be issued monmthly for those who already filed taxes.
THe IRS has urged families to files taxes for 2020 even if they genberally fdon’t to ensure they received the stimulus money.
It has also set up an online portal for families to register their details.
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