The new law not only increases the credit, but also the amount of taxpayers that will benefit from the credit’s highest rate and it also makes it fully refundable.

The American Rescue Plan signed into law on Mabrought significant changes to the amount and way that the child and dependent care tax credit can be claimed only for tax year 2021. Credit temporarily increased for Tax Year 2021 Only By contrast, under the new law for tax year 2021 only, a taxpayer with the same circumstances can potentially claim a refundable credit of approximately $1,500 (50% x $3,000). up to $6,000 of qualifying (for a maximum credit of $2,100) for two or more children or dependents.įor example, for tax year 2022 a taxpayer with one qualifying person, $3,000 in qualifying expenses and an AGI of $60,000 would qualify for a nonrefundable credit of approximately $600 (20% x $3,000).up to $3,000 of qualifying expenses (for a maximum credit of $1,050) for one child or dependent, or.If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit on your 2022 taxes of up to 35% of: Though the credit is geared toward working parents or guardians, taxpayers who were full-time students or who were unemployed for part of the year may also qualify.

The Child and Dependent Care Credit provides a tax break for many parents who are responsible for the cost of childcare.

For tax year 2022, the qualifying expense limits, maximum percentage of qualifying expenses, and credit-reducing income level have reverted back to the amounts prior to 2021.

For 2021 only, the American Rescue Plan, increased the maximum qualifying expenses to $8,000 for one person and $16,000 for two or more people, the maximum percentage of qualifying expense increased to 50% and the income level at which the credit begins to increase was raised to $125,000.

If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age so that you could work, you may qualify for the Child and Dependent Care Credit.

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