Although there have been a multitude of changes and adaptations as we navigate over a year into the coronavirus pandemic, one topic has become ever clearer – the importance of educating our children! The most recent affirmation of this notion comes in the form of the American Rescue Plan Act, recently passed by the federal government, to tackle the financial burden resulting from the pandemic, which includes targeted assistance for families with young children.
Part of the new legislative relief package includes expanded coverage for child care expenses via federal Child Tax Credits and direct payments to families:
- For the calendar/tax year 2021, the annual Child Tax Credit for families with children under the age of 6 has been increased to $3,600 ($300 per month per child) for income-eligible households (earning less than $75,000 up to $150,000 annually). Because the tax credit is retroactive to January 2021, the bill stipulates that qualifying families will be eligible for direct pay-outs in the form of refundable credits and/or advance payments starting July 2021 and extending through December 2021. (See here a link to the official government text of the Child Tax Credit provisions in the American Rescue Plan Act and a shorthand summary of who and how to qualify for the Child Tax Credit in the bill).
- For families with children between the ages of 6 and 17, the annual tax credit has been increased to $3,000. The same income thresholds apply. Again, see here a link to the official text of the Child Tax Credit provisions in the American Rescue Plan Act and a shorthand summary of how to qualify for the Child Tax Credit in the bill.
- Additionally, the Child and Dependent Care Credit limits have been increased. For the 2021 tax year, working taxpayers can reduce their taxes by claiming up to 50% of up to $8,000 of child care and similar costs for a child under 13, a spouse or parent who cannot care for themselves, or another dependent (and up to $16,000 of expenses for two or more dependents). Here is a link to the official text of the Child and Dependent Care Credit provisions in the American Rescue Plan Act and a shorthand summary how to qualify for the Child and Dependent Care Credit.
These difficult times have put enormous pressure on so many families. Throughout this past year, we are particularly proud of our continued dedication to helping our youngest students grow and learn on-site and in-person SAFELY for a majority of the pandemic period. Providing a safe, nurturing, and educational environment for children sets the foundation for a lifetime of learning, a journey that we have been determined to make possible through this unprecedented past year and that we look forward to facilitating for more families as the world steadily returns to normal.