New family tax credits – what you need to know!
There’s been some exciting legislation passed in recent months that will allow qualifying families to receive greater tax benefits for children and childcare-related expenses.
The federal government has passed a stimulus package that includes new tax credits for qualifying families with children. Eligibility for the added tax benefits depends on your unique tax situation, we are sharing information so you know what may be available to you and your family.
With the recently passed federal law, families may be able to claim the following 2021 child care tax credits:
- Up to $8,000 from the federal Child and Dependent Care Tax Credit (up to $4k for each of your first two children). For 2021 taxes, this would come as a refundable credit.
- Up to $6,728 from the federal Earned Income Tax Credit.
- Up to $3,600 per child for children under the age of 6 (as of 12/31/2021) from the Child Tax Credit.
- Up to $3,000 for children ages 7-17 (as of 12/31/2021) from the Child Tax Credit.
Each of these benefits has rules and limitations, so be sure to consult with your tax advisor to see how these credits may apply to your family. In the meantime, check out this 2021 Child Tax Credit calculator for a general estimated refund credit for those who qualify.
When it comes to child care, the American Rescue Plan legislation allows parents to write off expenses related to caring for a child, including child care. Eligible parents will be able to receive up to 50% back in a refund and claim up to $8k for one dependent, $16k for two dependents. Note that you won’t claim the credit until your 2021 taxes are filed next year. In the meantime, maintain a detailed record of your child care expenses, including receipts. When preparing your taxes next year, you will need to complete Form 2441 and attach it to your Form 1040 tax return.
For more details regarding our subsidized child care programs, and how to qualify for child care assistance, visit our website.
For complete details on the passed legislation, visit congress.gov.