In the face of rising inflation and skyrocketing petrol prices, the failure of lawmakers to extend the expanded Child Tax Credit through 2022 has been a severe setback for families.
The maximum value of the Child Tax Credit increased from $2,000 to $3,600 for children under the age of six and from $3,000 to $4,000 for children between the ages of six and seventeen last year.
The credit was also altered to become completely refundable, allowing families that do not owe any taxes to claim the entire amount of money they were entitled to.
In addition, half of the 2021 credit was distributed in monthly installments that were deposited into bank accounts between July and December of this year.
That is unfortunate because those monthly payments have been ruled out for the remainder of the year. Families with children, on the other hand, may still be in line for a substantial windfall if they claim the appropriate tax credit on their 2021 tax returns.
Another significant credit received a boost.
The Child Tax Credit received a great deal of attention last year as a result of its significant expansion.
However, there is a lesser-known benefit, the Child and Dependent Care Credit, that has seen a significant increase in the amount of money it can be claimed for the 2021 tax year.
The Child and Dependent Care Tax Credit allows parents who pay for daycare so that they can go to work to deduct a portion of their costs from their income.
Prior to 2021, parents could deduct a portion of up to $3,000 in daycare costs for one kid, or a portion of up to $6,000 in childcare costs for two or more children, depending on the number of children.
Parents could claim a portion of up to $8,000 in childcare costs for a single kid in 2021, or a portion of up to $16,000 in childcare expenditures for two or more children in the same household.
Families can now claim a portion of their income that is based on their income, with a maximum of 50 percent in 2021. (in previous tax years, it maxed out at 35 percent ).
That being said, parents who paid for childcare last year may be eligible for an $8,000 tax credit through the Child and Dependent Care Credit, which is administered by the IRS.
What’s even better is that the Child and Dependent Care Credit, as well as the Child Tax Credit, have been made completely refundable for the fiscal year 2021.
Consequently, a family with no tax liability can still get up to $8,000 in full from the government.
Don’t let that money go to waste.
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Many families are deeply disappointed by the elimination of the Child Tax Credit, as well as the monthly payments it provided to low-income families in need.
The Child and Dependent Care Credit, which reimburses taxpayers for childcare expenses incurred in the previous year, should be claimed by individuals who paid for childcare in that year.
In order to do so, a tax return from 2021 is required. Some lower-income individuals are not required to file a tax return, but doing so is the only way to qualify for a paycheck that could be worth up to $8,000.
Those who require assistance with their tax returns can take advantage of free programs such as VITA. However, it is advantageous to act promptly.
The tax-filing deadline of April 18 is less than three weeks away, and individuals who donate their time to assist others in preparing their taxes may find themselves increasingly booked up.
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