(WJW) –There could be another way to qualify for even more stimulus funds.
The child and dependent care credits are part of the $1.9 trillion American Rescue Plan Act signed into law by President Joe Biden in March.
The amount of eligible expenses for the child and dependent care credit rose under the act, and will be refundable under the new law — but only for 2021.
This year, those who qualify can claim certain expenses of up to $8,000 for one eligible child, or $16,000 for two or more eligible dependents. Both amounts are more than twice that of prior limits.
This year, the top credit percentage of eligible expenses also goes up to 50%. That means the maximum credit someone could claim is $4,000 for one dependent, or $8,000 for two or more dependents.
As was the case previously, the credit percentage goes down the higher a taxpayer’s earnings. However, more people will qualify for the new maximum because the adjusted gross income at which the rate decreases is ballooning from $15,000 to $125,000.
The credit rate plateaus at 20% for those earning between $183,000 and $400,000, at which point it’s phased out.
Another major change for 2021: the credit — for the time ever — is 100% refundable.
“This means that an eligible family can get it, even if they owe no federal income tax,” the IRS explained.