Whitehouse Urges Parents to Take Full Advantage of Expanded Child and Dependent Care Tax Credit
SENATOR SHELDON WHITEHOUSE
American Rescue Plan increased tax credit for childcare expenses up to $8,000 for two dependents.
Washington, D.C. – This tax filing season, U.S. Senator Sheldon Whitehouse is encouraging Rhode Islanders to be sure to take advantage of the expanded Child and Dependent Care Tax Credit, which is bigger and will provide support for more families this year thanks to the American Rescue Plan.
The American Rescue Plan increased the credit substantially for 2021 – up to $4,000 for one qualifying dependent and $8,000 for two or more qualifying dependents. The credit is also refundable, meaning a filer does not have to owe taxes to claim the credit if they meet certain requirements.
“If you paid for childcare last year, there is a good chance you will be able to get thousands of dollars back in your pocket this filing season thanks to our American Rescue Plan,” said Whitehouse, who serves as Chairman of the Subcommittee on Taxation and IRS Oversight.
“Skyrocketing child-care costs are a huge stress on working families that holds back the entire economy. I’m committed to doing everything I can to make childcare more affordable.”
The changes mean that more taxpayers are eligible for the credit for the first time and that, for many taxpayers, the amount of the credit will be larger than in prior years. The Child and Dependent Care Credit can help pay for childcare and the costs of caring for other dependents.
The credit is calculated based on a tax filer’s income and a percentage of expenses for the care of qualifying dependents to enable caregivers to go to work or school.
For example, the credit is equal to 50 percent of childcare expenses for taxpayers with an income of $125,000 or lower.
Taxpayers with an adjusted gross income under $438,000 may be eligible for the credit.
The average annual cost of childcare for a 4-year-old in Rhode Island is $10,687, according to the Economic Progress Institute.