You may already be planning for the first payments you’ll get with the revised. But the passed in March includes another tax credit to help parents in 2021. If you have child care expenses — whether because you’re paying for a day care center or for a provider to care for your child in your home — you can claim the child and dependent care credit.
In short, that means credit for any qualifying expenses related to child care services up to $6,000 for one child and $16,000 for two or more dependents. Depending on your income, you can claim up to 50% of these expenses.
We”ll explain how these child care tax credits work below. In the meantime, if you need to figure out how much you’ll get in child tax credits, you can use this. You should check to make sure you are for the payments and if your are, as well. We’ve also made some suggestions on . And here’s more information on how you might benefit from new in 2021 — and how to before it disappears on May 17.
The child and dependent care credit for 2021, explained
The child and dependent care credit is designed for parents to claim expenses from child care throughout the year, for example, if you’re working and paying for services such as day care or a babysitter for your kids. These expenses can be claimed when you file your taxes each year.
How much you can get from the expanded child care credit has changed for expenses accrued this year. For instance, the maximum amount you could claim for multiple children in previous years had been $6,000. Under the new stimulus bill, you can now claim up to $16,000 in child care expenses for multiple children.
Who qualifies as a child care provider
Any organization or person that provides care for your dependent is counted as a child care provider as long as you’re paying them. The IRS has relatively lax rules about care providers according to Elaine Maag, principal research associate at the Urban Institute. Here are some examples.
|What qualifies||What doesn’t qualify|
|Day care expenses||Your spouse|
|Before- and after-school care programs||The dependent’s parent|