This year’s tax-filing season is here and Americans are encouraged to file their federal income tax returns by 2021 in order to reap the benefits of some tax benefits they may not be aware of.
The Child and Dependent Care Credit was greatly expanded under the American Rescue Plan Act. For the first time, it is also refundable, fox8 reported.
For families who pay for daycare so they can work or search for employment, the federal government offers a tax credit of up to $4,000 for one eligible person and up to $8,000 for two or more.
You (or your spouse if you filed a joint return) must have lived in the U.S. for more than half a year to qualify. If you are stationed out of country for military duty, you may be subject to different rules.
Check your eligibility here.
A parent can also claim the expanded Child Tax Credit, even if they received monthly payments in advance during the second half of next year. For children aged 6-17, the credit is up to $3,000, and for children aged 5 and under, it is $3,600.
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Workers without children were given a higher Earned Income Tax Credit under the American Rescue Plan Act. People without dependents can claim up to $1,502, up from $538 the year before. Low- and moderate-income families with children can also benefit from the changes.
The Recovery Rebate Credit may be available to those who missed the third round of stimulus payments last year. Up to $1,400 will be available for parents who welcome a child in 2021.
A majority of taxpayers who took the standard deduction can also deduct a cash donation made last year. The joint tax deduction for married couples is $600, while the individual tax deduction is $300.
According to the IRS, these benefits above will only be available to people who file a federal income tax return for 2021.
Those who don’t typically file a tax return should consider doing so even if they have little or no income. They can still get the expanded benefits if they don’t file a tax return.
The tax-filing deadline for the majority of Americans is April 18, 2022.
