The American Rescue Plan gave a one-year boost to a tax credit aimed at helping parents who pay for child care.
Most U.S. families with children are familiar with the federal Child Tax Credit, given that parents of more than 60 million kids received enhanced payments in 2021. But there's another tax benefit geared to parents that may be less well known than the CTC but that can be far more generous, providing up to $8,000 in tax credits this year.
The expanded Child Tax Credit, by comparison, provides $3,600 for each child under six and $3,000 for children between 6 to 17. The expanded tax break lets families claim a credit worth 50% of their child care expenses, which can be up to $16,000 for two or more kids. In other words, families with two kids who spent at least $16,000 on day care in 2021 can get $8,000 back from the IRS through the expanded tax credit.
A spouse or dependent of any age who can't care for themselves and who lives with you for more than six months of the year. Day camps are eligible, but overnight camps don't qualify since the latter aren't necessary for a parent to work or to look for work.
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