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Americans who worked this year and at the same time had to pay for child or dependent care can apply to the Internal Revenue Service (IRS) for the “Child and Dependent Care Credit” with which they can obtain up to $ 8,000 in reimbursement .
The credit is calculated based on your income and a percentage of expenses in which you incurred for the care of qualified persons, to be able to work, look for work or attend a learning institution.
By virtue of the “American Rescue Plan” approved last March in the United States Congress, in fiscal year 2021, the amount for credit increased from 35% to 50%.
The IRS indicates on its website that this year the third stimulus bill increased the amount available under the credit, specifically to $ 4,000 for one person who qualifies and $ 8,000 for two or more eligible people. The tax credit is refundable, which means that a family eligible for this benefit can receive the payment even if they do not owe taxes to the IRS.
“This means that more taxpayers will be eligible for the credit for the first time, and, that, for many taxpayers, the amount of the credit will be higher than in previous years. However, taxpayers with an adjusted gross income of $ 438,000 or more are not eligible for this credit even though they may have claimed this credit in the past.
If the amount of the credit you are entitled to exceeds the amount of federal tax you owe, you can still claim the full amount of it and can be refunded for the amount of the credit that exceeds your tax liability, the IRS clarified.
The request must be made using form 2441.
To apply for the credit, it is required that the person and the spouse (in the case of a joint return) generates income from work during the year to claim it.
Any family with an income of no more than $ 125,000 may be eligible for the credit. It will cover 50% 50% of the qualification expenses. However, that percent drops to 20 for income between $ 125,001 and $ 183,001.
You are a person qualified to receive the credit, according to the IRS, if you meet any of these requirements:
• Your dependent is under the age of 13 when care is provided
• If your spouse is not mentally or physically capable of taking care of himself and lives with you for more than half the year
• If a person who is not mentally or physically capable of caring for himself lives with you for more than half the year and is your dependent; or would have been your dependent, except that he or she receives more than a certain amount of gross income ($ 4,300 in 2021), files a joint return, or you or your spouse (in the case of a joint return) can be claimed as a dependent on someone else’s statement
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.