The new guidance from the Internal Revenue Service is related to claiming money from the 2021 stimulus package. It is done especially for the funds from the expanded Child Tax Credit.
The Child Tax Credit is a part of the Biden administration. An American Rescue Plan raised the credit from $2,000 to $3,600 to every child aged 5 years and younger. $3,000 for each child aged 6-17. Half credit can be paid in monthly installments of $250 or $300. The people can claim the balance while filing 2021 taxes in 2022.
Words of IRS Commissioner
According to Alabama Local News, IRS Commissioner Chuck Rettig said, “There are many important tax credits available for families, and we don’t want anyone to overlook the Child and Dependent Care Credit. We encourage families and others who may qualify for this credit to carefully review the criteria to ensure they receive the maximum amount they’re entitled to. We also encourage the tax professional communities and others to share this important information.”
Most of the parents received half of the expanded child tax credit monthly. The people can claim the remainder of their taxes while filing. This also includes those people who don’t have to file a return due to low income.
Guidance of IRS
The IRS guidance gives a clear picture of who can file for tax credits and who can be considered a qualifying child. According to IRS, the people who can claim the payments are- those who have not turned 18 till January 18, 2022. Either they are children, step-children, eligible foster children, siblings, step-siblings, half-siblings, or any descendent if the child lived with the taxpayer and could not provide their support. Suppose the child lived with the taxpayer for more than six months in 2021. Either the child was a U.S. citizen, national or resident alien if the child did file a tax return jointly with their spouse in 2021 only to claim a tax refund.
Child and dependent care credit
The other update was a reminder that the Child and Dependent Credit expanded for 2021. The taxpayers can get a credit with the value of 50% of their qualifying child care expenses. The maximum eligible expense for this credit is $8,000 for one qualified person $16,000 for two or more for the tax year 2021. The taxpayers not eligible for the credit are those with taxable income. of more than $438,000.
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