Families with children under 13 years old might get an unexpected stimulus check payment amounting to $8,000 following the 2021 Child and Dependent Care Credit adjustments.
According to the Internal Revenue Service (IRS), this stimulus check payment will cover any work-related expenses that a parent has incurred "for the care of qualifying persons" to enable the taxpayer to look for work or go to work. It is aimed at helping fathers and mothers get back to their jobs without worrying about the expensive cost of a child or dependent care.
This benefit will include family expenses like daycare fees, after-school programs, nanny or babysitter services, or similar services for children under 13 years old, and the cost of care for a parent or spouse who cannot look after themselves. Under the law, a taxpayer may be eligible to get 50 percent back as a refund or tax break for a child or dependent care-related expenses or a maximum of $8,000 for one dependent and $16,000 for two or more dependents.
Before expanding the 2021 Child and Dependent Care Credit, the maximum amount a taxpayer could claim was $6,000.
Eligibility for 'Surprise' Stimulus
The expanded credit is also part of the American Rescue Plan, which President Joe Biden approved in March 2021, with claims made for the 2022 tax season. So, if the parents have been hiring a babysitter for 2021, they may write this off as a child care expense when they file for their taxes by April 2022.
Unlike the expanded child tax credit, which rolled out on July 15, 2021, and will keep rolling out for the next six months, taxpayers will have to wait until tax season to get their money from the Child and Dependent Care Credit. However, to be eligible for this surprise stimulus check payment, the parents will have to provide proper proof, which means they will have to keep receipts and records of the transactions or payments for the 2021-2022 tax year.
According to CNET, while the IRS' rules on this claim aren't strict, parents may be able to get a refund without any problems if they have been paying child care providers in an "official capacity" instead of paying a teenager as a babysitter. This is because teens do not have documents to support their capacity as service providers.
When parents file for Child and Dependent Care Credit, they will also need to fill out Form 2241 with Form 1040 on their tax returns. They will need to provide the name, address, and TIN of the provider or attach the provider's Form W-10.
Parents qualified to file for this claim must have a gross income of not more than $125,000 for the year. Taxpayers with a gross income of $125,001 and $400,000 may get 20 percent of the claim instead of 50 percent. The credit will be phased out for taxpayers earning beyond $438,000 for the covered financial year.
Different From 4th Stimulus Check
Meanwhile, this surprise stimulus check payment is also different from the planned fourth stimulus aid those lawmakers are deliberating in Congress amid the Delta variant surge. However, a Wall Street analyst said that a fourth stimulus check in the amount of $1,400 might be unlikely anymore as the Biden administration is pursuing its $2 trillion infrastructure plan for old schools, roads, airports, housing, and broadband technology.
The analyst also said that the U.S. economy would be rebounding due to the vaccination programs and the drop in the unemployment rate as more businesses and companies recover. Thus, more government aid might no longer be justified in Congress.
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