Parents may receive up to $8,000 as part of the American Rescue Act in 2022. Families earning less than $125,000 and having at least two children under 13 may qualify for financial assistance as the IRS distributes the sixth cycle of payments, The Sun reports.
Act of 2021 American Rescue Plan
A colossal impact of COVID-19 has been felt in the United States economy and health sector. Recovery efforts from the disaster will be made easier by the American Rescue Plan Act of 2021. Republicmonews reports a recent estimate puts the cost of the economic rescue package around $2 trillion, the cost of which is one of the highest in U.S. history.
The American Rescue Plan was signed into law by President Biden in March, and hundreds of millions of dollars have since been distributed to the American people. Following the two $1,200 and $600 installments, most Americans were given a $1,400 payment.
Biden has put in place many measures as part of his American Rescue Plan. One less talked about measure could help Americans with dependents or children get up to $8,000. Children and dependent care tax credits are intended to assist families that have additional expenses as a result of being parents or caregivers.
How Child and Dependent Care Tax Credit works
Families earning up to $125,000 per year are eligible to receive a stimulus check for child and dependent care. You can receive up to $8,000 per year as reimbursement for care costs for an official dependent child under the age of 13. In the case of two children under 13 or official dependents, 50 percent of qualifying expenses up to $16,000 will be reimbursed. A family earning between $125,000 and $183,000 can also qualify for up to 20 percent of the grant.
In order to claim CTC for 2022, tax returns must have been filed for the prior year. Taxpayers who received CTCs have been mailed IRS Letter 6419, reports The Sun. This letter provides instructions for claiming any leftover credit leftover by parents so that they can receive their full CTC entitlements. Payments received in advance of the CTC for 2021 will not be taxed because they are not considered income.