It should be pretty clear by now that 2022 is going to be nothing like the stimulus check-filled year we got in 2021. The inability of congressional Democrats to pass President Biden’s 12-month extension of the expanded monthly child tax credit checks has seen to that. However, just because the monthly checks have ended, that doesn’t mean the child tax credit has gone away entirely. You can still get a credit for up to $2,000 per child this year, as we detailed here. And there’s a related benefit also available this year — the Child and Dependent Care Credit, details about which we’ll get into below.
Child and Dependent Care Credit 2022
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 that provided a third round of stimulus checks, for $1,400.
Families with an adjusted gross income of no more than $125,000 can get the full tax credit. It will cover 50% of their qualifying expenses. However, that number drops to 20% for incomes between $125,001 and $183,001.
Furthermore, this benefit is only available for the 2021 tax year, for which you’ll file your tax return in the coming weeks or months. The benefit 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.
Fast facts about the credit
- You have to complete Form 2441, Child and Dependent Care Expenses, to claim the credit. And include the form when you file your federal income tax return.
- Records you should keep to support your claim for the credit are in IRS Publication 503, Child and Dependent Care Expenses and Q3.
- If your dependent or spouse can’t take care of themsleves? “Your records should show both the nature and length of the disability.”
“The credit is refundable”
The IRS has also shared some important additional details to know about the Child and Dependent Care credit: “For 2021, the credit is refundable for eligible taxpayers. This means that even if your credit exceeds the amount of federal income tax that you owe, you can still claim the full amount of your credit, and the amount of the credit in excess of your tax liability can be refunded to you.”
The purpose of the credit is implied by the name. It’s to help you recoup expenses incurred from caring for dependents, so that you can focus on your own work.
Also important to know? You can get up to 50% of as much as $16,000 in expenses for two or more dependents. Which means that a working family that meets the income requirements? That family could get an additional stimulus payment of up to $8,000 as a tax credit.