When the expanded child tax credit was allowed to expire at the end of 2021, it had a significant impact on low-and middle-income households across the country. From June to December 2021, this payment arrived in bank accounts and mailboxes, making it much easier for cash-strapped parents to make ends meet. When this occurred, the loss of monthly child tax credit payments pushed millions of families back into financial distress.
The benefits you have no idea about
The good news is that a new monthly payment for families with children may be on the way. Here’s what you need to know about this tax credit benefit, as well as who may be eligible.
There has been a lot of debate about how to claim the other half of the child tax credit on your tax return.
How to claim it
This credit was part of President Joe Biden’s plan which also included payments for the Child Tax Credit to families on a monthly basis.
This means that families with children or dependents enrolled in daycare or other types of eligible care can claim a few thousand dollars more on their tax returns this year. Given the current cost of childcare in the United States, this could be a huge benefit for many families — but before you start counting on this extra cash, it’s important to understand who may or may not be eligible for the credit.
There are restrictions on who can claim the credit for child and dependent care expenses, as with the other Child Tax Credit benefits that were improved for 2021. This credit may be claimed by taxpayers who paid someone to care for their qualifying child, children, or dependents in 2021 in order to work or look for work, according to IRS guidelines.
A person who qualifies is:
- A child under the age of 13
- A spouse who is unable to care for themselves.
- A dependent who is unable to care for themselves.
While you must meet the eligibility requirements for the tax credit, the good news is that claiming the benefit is simple. To take advantage of this credit, all you have to do is claim it on your taxes. This is a nonrefundable credit, and the only way to claim it is to include it on your 2021 tax return when you file it.
