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The Internal Revenue Service has given new instructions on claiming stimulus funds from last year. Specifically, cash obtained from the expansion of the Child Tax Credit.
The child tax credit, which was included in the Biden administration’s American Rescue Plan, increased the existing credit from $2,000 to $3,600 for each kid under the age of five and $3,000 per child aged six to seventeen. The other half of the credit – $1,800 or $1,500 – was paid in monthly payments of $300 or $250 per kid from July to December 2021. The remaining may be claimed when 2021 taxes are filed in 2022.
There are other critical tax credits available to families, and we want to ensure that no one overlooks the Child and Dependent Care Credit,” IRS Commissioner Chuck Rettig stated. “We encourage families and other individuals who may be eligible for this credit to thoroughly evaluate the eligibility requirements to ensure they receive the maximum amount available. Additionally, we encourage the tax professional and other communities to disseminate this critical information.”
Many parents received half of their extended child tax credit in monthly payments, but the remaining must be claimed upon filing, even for those who are not required to file a return due to their income levels.
The IRS provides information on who qualifies as a qualifying kid. According to the IRS, a person may be claimed if they meet the following criteria:
- They have not reached the age of 18 by January 1, 2022
- They include the taxpayer’s son, daughter, stepchild, qualified foster child, brother, sister, stepbrother or sister, half-brother or sister, or descendant.
- In 2021, the child did not contribute more than half of their own support.
- The child spent more than half of 2021 with the taxpayer.
- The taxpayer declares the youngster as a dependent on his or her tax return.
- In 2021, the child did not file a joint tax return with their own spouse or did so just to collect a tax refund.
- The child was a citizen, national, or resident alien of the United States.
Credit for child and dependent care
Another update served as a reminder of the enhanced Child and Dependent Care Credit for the tax year 2021.
Taxpayers may be eligible for a credit equal to 50% of their qualifying childcare expenses, depending on their income. For the tax year 2021, the maximum creditable expense is $8,000 for one qualifying individual and $16,000 for two or more suitable individuals.
The credit is not available to taxpayers with an adjusted gross income of more than $438,000 per year.