The Child and Dependent Care Credit is a federal tax credit that assists families in paying for child care expenses while working or looking for a job. Families who must pay for the care of a physically or mentally incapable spouse or individual may also qualify for the credit. This credit “repays” a percentage of the money you spend on health care and can lower your tax bill by hundreds or even thousands of dollars.
Are You Qualified To Receive CDCTC?
In order to qualify for the child and dependent care credit, these requirements must apply to the following individuals and families:
Your dependent qualifying child who was under age 13 when the care was provided,
Your spouse who was physically or mentally incapable of self-care was living with you for more than half of the year
An individual is physically or mentally incapable of self-care if, as a result of a physical or mental defect, the individual is incapable of caring for his/her hygiene or nutritional needs or requires the full-time attention of another person for the individual’s own safety or the safety of others.
Claiming The Tax Credit
If taxpayers qualify for the child and dependent care credit, they must then complete Form 2441, Child and Dependent Care Expenses, and attach the federal income tax return, Form 1040, U.S. Individual Income Tax Return as well. Please remember to provide how much you’ve spent on dependent care in 2021. At this time, any recorded receipts, credit card statements, bank account statements, or any other forms of dependent care documentation would be good to keep careful track of in the given tax year.
Maximum Dollar Limit For CDCTC
For the tax year 2021 (the taxes you file in 2022), the total expenses you can use to calculate the credit cannot exceed $8,000 (for one qualifying person) or $16,000 (for two or more qualifying individuals). The maximum credit you may receive if you have one child is $4,000 (if your AGI is below $125,000) and $1,600 (if your AGI is between $183,000 – $400,000). If you have two or more children, the maximum credit you may receive is $8,000 (if your AGI is below $125,000) and $3,200 (if your AGI is between $183,000 – $400,000).
Resolve Your Tax Bills
If you’ve found yourself in a nasty mess with the IRS, take a deep breath. For taxpayers who may have difficulty paying off an excessive amount of tax debt, there’s a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
How Simple Is Qualifying?
Considering that the Fresh Start Program is a federal program, you would think meeting the qualifications may be very difficult, but really, it’s a lot simpler and quicker than you think. Take the following steps in order to find out if you are eligible in as little as 3 minutes.
- Fill out some basic information about yourself and your back taxes here.
- Have a representative reach out to you to discuss your eligibility.
- Go through the enrollment process and finally reduce or eliminate your tax liabilities.