2021 Dependent Care Credit- Expanded and Refundable

For Tax Year 2021, the Child and Dependent Care Credit has been improved and expanded.
The maximum expenses on which the credit is based has been increased from $3,000 for one qualifying child to $8000 and from $6,000 for two or more qualifying children $16,000.

The credit is now FULLY REFUNDABLE for all taxpayers who have a principal place of abode in the U.S. for more than one-half the year. What this means is for 2021, that even if the credit exceeds the amount of Federal income tax that is owed, the full amount of the refund is still claimed and any credit in excess of the tax liability is refunded. Yes, it can increase your refund.

The maximum credit rate has also been increased from 35% to 50%. Because of this, the maximum credit is now $8,000. Irs.gov has Child and Dependent Care Credit Thresholds chart for the 2021 AGI thresholds and credit rates.
Taxpayers must identify all persons or organizations that provided care for their child, dependent, or spouse. This identification must include the provider’s name, address, and taxpayer identification number (TIN- EIN or Social Security Number).
​ 
#ajoyoustaxresult #2021childcarecredit #2021dependentcarecredit