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Discover More About The Child Care Tax Credits, And Child Care Subsidies That Could Benefit You

What is my Child Care Savings

Available Child Care Tax Credits

The Child Tax Credit is a refundable tax credit of up to $3,600 per qualifying child under 18.  Because it is a tax credit, it means that it reduces your tax bill on a dollar-for-dollar basis. 

How do I qualify?

You can take full advantage of the credit if you income is under $75,000 for single filers, $150,000 for married filing jointly and $112,500 for head of household filers. 

Some of the other child-related eligibility requirements for the Child Tax Credit include:

  • You must have provided at least half of the child’s support during the last year, and the child must have lived with you for at least half the year (there are some exceptions to this rule; check with the IRS for more details.

  • The child cannot file a joint tax return (or file it only to claim a refund).

  • To take the Child Tax Credit for the 2021 tax year, the child has to be 17 or younger on December 31, 2021.

    How to get paid now for the Child Tax Credit?

    The American Rescue Plan Act of 2021 allows parents to get monthly checks in 2021 as an advance payment on their 2021 Child Tax Credit. Here are some things to know about how that works:

    1. You can either claim 100% of your 2021 Child Tax Credit on your taxes when you do your 2021 taxes (that’s the tax return due in April of 2022), or you can get 50% of that money now in cash and claim the other 50% on your taxes later.

    2. Under the cash payment program, you get six monthly payments from the U.S. Treasury via direct deposit starting July 15 and running through December of 2021. For example, if you qualify for a $3,000 Child Tax Credit, you could get six $250 payments between July and December (for a total of $1,500) and then claim the remaining $1,500 on your taxes.

    3. The payments will be made on the 15th of each month, unless the 15th falls on a weekend or holiday. They will be direct deposit, paper check or debit card.

    4. The IRS will use your most recent tax return to determine whether you qualify for the Child Tax Credit and to see how old the kids will be so it knows how much to send you each month.

    5. If you’d rather claim 100% of your Child Tax Credit at the end of the year, you can opt out of the periodic payment program. The U.S. Treasury is setting up an online portal to do that.

    6. The online portal will also be the place to tell the IRS about things that affect the amount of your payment, such as a change in the number of kids, marital status or income.

    7. If it turns out you were overpaid or underpaid during the year, you may need to true that up on your tax return at the end of the year.

  • For the 2021 tax year, the Child and Dependent Care Credit can get you up to 50% of up to $8,000 of child care and for a child under 13. 
  • The percentage of allowable expenses decreases for higher-income earners – and therefore the value of the credit decreases. 

How do I qualify for the Child and Dependent Care Tax Credit?

  • A dependent child must be 12 or younger at the time the child care is provided.

  • Spouses and other dependents don’t have an age requirement, but IRS rules say they must have been physically or mentally incapable of self-care and must have lived with you for more than half the year.

  • If you’re married, you must file as married filing jointly.

  • You must have earned income — money you earned from a job. Investment or dividend income doesn’t count.

  • You must provide the care provider’s name, address and Taxpayer Identification Number — either a Social Security number or an Employer Identification Number.

You can’t claim the credit for payments to care providers who are:

  • Your spouse

  • A parent of the dependent child

  • A dependent listed on your tax return

  • Your child who is age 18 or younger, even if they’re not listed as a dependent on your return

The Earned Income Tax Credit is specifically designed to benefit working people with low incomes. People with kids can get a higher credit.

The tables show both the maximum credits and the maximum income allowed before losing the benefit.

How to qualify for the Earned Income Tax Credit

  • You have to file a tax return to get this credit, even if you don’t owe tax and are not legally obligated to file a return. 
  • This tax credit is refundable. So if you’re due to receive a credit of $5,000 but you owe only $2,000 in taxes, you might get a check for $3,000. 

These are the rules for federal tax credits. Please consult with your tax advisor about how these credits might apply to your family.