If you are one of millions of Americans who pay someone to care for a child or a dependent with disabilities, the American Rescue Plan is here to help. Passed in March 2021, it lets those who qualify write off a higher amount associated with specific expenses.
The time to act is now: Eligible participants are advised to start gathering the necessary documents to avoid losing out on the aid when you file your income tax return next year. If approved, you could receive up to 50% back in a refund for expenses related to child care.
The maximum amount an individual can claim is $8,000 for one dependent and $16,000 for two or more.
A post by MSN.com provides further detail about the American Rescue Plan:
The child and dependent care credit is a tax break designed mostly to let parents claim expenses from child care. For example, if you’re working and paying for a day care provider now, that expense can be claimed when you file your taxes in 2022.
How is credit different in 2021? In previous years — including tax year 2020 — the maximum amount you could claim for multiple children was $6,000. Under the new stimulus law, you’ll be able to claim up to $16,000 in child care expenses for multiple children and up to $8,000 for one child or dependent alone.
Keep in mind that this credit will not actually be claimed until next year when you file your 2021 taxes. Maintaining detailed records of all expenses related to child care (day care receipts, for example) is your best bet for a smoother filing experience.
Tax Year 2021: Will You Get $8,000 Or $16,000 Back For Child Care Expenses? was originally published on wzakcleveland.com