The tax season has started and the outbreak of coronavirus remains latent.
Since President Joe Biden unveiled his $ 1.9 trillion economic rescue plan, better known as’American Rescue Plan’, the Democrat has continued to emphasize the help low-income families need.
That is why, through the new economic rescue, It is intended to raise the maximum amount of the child tax credit, which could be up to $ 3,000 for dependents ages six to seventeen, while dependents under six years of age could get their parents to obtain a credit of up to $ 3,600, of course, as long as the resolution passes in Congress.
However, ehe child tax credit is not the only benefit that taxpaying parents have, as there is also the tax credit for childcare, But, what is the difference between one and the other and how do you know which one you can apply to? We will explain to you below.
Child Tax Credit and a Child Care Tax: Differences Between Both Credits
The child tax credit is a form of “tax relief” available to taxpayers who have dependents under the age of 17 at the time of filing their taxes. Through the ‘American Rescue Plan‘it is planned to raise the amount of this credit to $ 3,600, make it refundable and modify the payment method, so that an annual direct deposit is not made, but rather to divide the total payment on a monthly basis, thus the support would be consistent.
Now, regarding the tax credit for the care of children and dependents, this It is intended merely to assist working parents with the expenses of daycare or the care of their dependents. The big difference between this and the child tax credit is that here you can include adult dependents and not just those under 17 years of age.
Through this credit, Only 20% to 35% of care expenses are covered up to a maximum of $ 3,000 for each eligible dependent. According to the credit rules, the maximum amount that can be claimed as an expense is $ 6,000. According to the IRS, this credit is “a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying person. The percentage depends on your adjusted gross income. “
How do I know if I can get a child tax credit or a child and dependent care tax credit?
To find out if you are eligible to receive any of these credits, The IRS has tools that you can use in a personalized way that will tell you whether or not you apply for one of these credits, because each case is different.
In the case of the child tax credit click on this link. An IRS tab will open, you just have to click on ‘Begin’ and then on ‘Continue’, in this way Interactive Tax Assistant (ITA) will show you a questionnaire that You should answer with complete honesty, because, depending on your answers, you will be informed if you are eligible for the child tax credit or not.
Now, if you want to know if you are eligible for the child and dependent care tax credit, click on this link, which will take you to another IRS page where you will have to answer a different questionnaire with the help of the Interactive Tax Assistant. You will have to click on ‘Begin’ and then on ‘Continue’ to start the form.
At the end of each questionnaire You will be informed if you are eligible for the credit you wish to request.
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