The way the stimulus check program has worked during the 18 months or so of the COVID-19 pandemic thus far is that three much-needed payments have been sent out automatically. In March and December of 2020, the federal government sent out two checks for $1,200 and $600, respectively, on an automatic basis. That was followed in March of this year, under the Biden administration, by another automatic check. This time for $1,400. Meanwhile, there’s another stimulus payment available to take advantage of that many people might not know about. It’s Child and Dependent Care Tax Credit, one of the main differences from those earlier stimulus checks also being that this benefit needs to actually be asked for. You won’t get it automatically, in other words.
Another stimulus payment available
Here’s what the IRS says about it. “The child and dependent care tax credit is a credit allowed for a percentage of work-related expenses that a taxpayer incurs for the care of qualifying persons to enable the taxpayer to work or look for work.” This benefit was another that resulted from the $1.9 trillion stimulus law earlier this year, the same one that provided the new round of stimulus checks for $1,400.
Kiplinger’s has a good explanation of some of the highlights. For starters, every family with an adjusted gross income of no more than $125,000 can get this tax credit. It will cover 50% of their qualifying expenses. However, that number drops to 20% for incomes between $125,001 and $183,001.
Key details to know — eligibility, and more
You can visit this IRS portal to get all your key questions answered about this tax credit. To claim it for 2021, according to the IRS, you’ll need to complete Form 2441. Also, you (and your spouse, if applicable) must have “earned income,” from a job.
Married couples must file a joint tax return to obtain the credit. And you’re required to provide details like the name and Taxpayer ID Number of the person who provided the care.
For now, this benefit is only available for the 2021 tax year. It can get you as much as 50% of up to $8,000 of the cost of child care and similar expenses tied to the care of children under 13. Or a spouse, parent, or other dependent who you take care of who can’t care for themselves. The point of this credit is to help pay you back for certain expenses. Specifically, ones incurred in caring for those dependents so that you can focus on your own work.
You can also get up to 50% of as much as $16,000 in expenses for two or more dependents. All of this means that a working family that meets the income requirements could, for example, get an additional stimulus payment of up to $8,000 as a tax credit.