The now-defunct child tax credit expansion is back in the news this week, thanks to AOC saying the expiration of the monthly checks is at least partly responsible for a rise in crime. And that she’s so disgusted with the “s–tshow” of Congress that she thinks about quitting politics “all the time.” Such comments, however, ignore a couple of key facts — such as the second half of the child tax credit, coming via this year’s tax season. Plus other benefits, like the Child and Dependent Care Credit.
Taxpayers will claim that second half of the child tax credit when filing a federal tax return this year. It’s not money in hand, at least not on the front end, the same way last year’s monthly checks were. But that credit can certainly contribute to a taxpayer getting a bigger refund on the back end.
Child and dependent care credit
One reason this year will be an extraordinary one for the IRS? It has to do with multiple consequences associated with last year’s stimulus law. The American Rescue Plan was packed with credits and other benefits meant to help soften the economic blow from the Covid pandemic. And those benefits included a change to the child and dependent care credit, which we’ll describe below.
Importantly, this benefit is only available for the 2021 tax year. Which is, of course, the tax year for which you’ll file your tax return in the coming weeks or months. The credit 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 another dependent who you take care of who can’t care for themselves.
Here’s what the IRS says about the child and dependent care credit. “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 in early 2021. The same law, remember, that provided a third round of stimulus checks, for $1,400.
This IRS page, meanwhile, will tell you everything else you need to know.
2022 Tax Season
This year, 2021 tax returns — as well as requests for an extension to file and pay any tax owed — are due to the IRS by Monday, April 18, for most taxpayers. Normally, April 15 would be the date, but there’s a federal holiday on that day this year (a Friday). That pushed the date forward to Monday, April 18.
Whether or not your return relies on things like the child and dependent care benefit, here’s something else you should know. The IRS is once again incredibly backlogged right now — which is a good reason to finish and file your return ASAP.
In an update posted to the IRS website just a few days ago, the tax agency reiterated that most people should get their returns in 21 days or less. That is, when they e-file. And when they also choose to have any refund direct-deposited. Obviously, refunds coming through the postal service will take at least that long, and likely longer.