2021 is proving to be the year of the federal stimulus check. By the end of the year, millions of American families will have received no fewer than seven such checks, believe it or not. And, in some cases, a few more checks beyond that. The seven stimulus checks include half a dozen child tax credit payments. As well as the $1,400 stimulus check from March. Among the others that can add to this total, meanwhile, are payments such as the Child and Dependent Care Credit.
Child and Dependent Care Credit 101
Here’s how the IRS explains this tax credit, which has been expanded for 2021. “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.”
The $1.9 trillion stimulus law enacted in March — which made those $1,400 stimulus checks possible — is what also increased this tax credit amount.
Among the important details to know about this tax credit is who’s eligible. According to Kiplinger’s, as we noted in a previous post, every family with an adjusted gross income of no more than $125,000 can get this tax credit for child and dependent care expenses. It will only cover 50% of their qualifying expenses, however. And that number drops to 20% for incomes between $125,001 and $183,001.
Payment details, eligibility, and more
This IRS portal walks through everything you need to know about how much you can get, and who’s eligible. To claim the credit for 2021, the tax agency says you’ll need to complete Form 2441. And include that form when you file your tax return.
Here’s how the personal finance news site Nerdwallet explains the credit. For the 2021 tax year only, you can get “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).” So, what if you have two or more eligible dependents? That means a working family that meets the income requirements could get an additional stimulus payment of up to $8,000 as a tax credit. Again, for this year only.
Be sure and pay close attention to all the requirements the IRS lists for this stimulus benefit. According to the folks at TurboTax, for example, you (and your spouse, if applicable) must have “earned income,” from a job. If you’re married, you must file a joint tax return. Also, you’re required to provide details like the name and Taxpayer ID Number of the person who provided the care.