- Tax Preparing – Tax Credits for Parents and Their Children
Tax Preparing – Tax Credits for Parents and Their Children
Through national tax laws, you are eligible to receive additional tax credits for them. Certain tax credits can be credited to your name if you become eligible for the Child Tax Credit. Please remember that before preparing tax returns, you’ll have to register your child within 2021 to receive these tax benefits. Here are more details for you to check out:
Available Tax Credits for Babies in 2021
The CTC is one of the additional tax credits outlined in this year’s ARPA or American Rescue Plan Act. It was updated to include eligible taxpayers that are earning within or below certain income limits set by the government. Whether filing taxes manually or using software for tax returns, you must remember to include these updates to continue receiving them moving forward. Eligible families who receive below a certain income are entitled to a $3,600 tax credit for each child aged 0 to 5 years old and a $3,000 tax credit for children from 6 to 17 years old. This new CTC update includes babies born and adopted within the year. You are also eligible to receive $250 a month for your children between 6 and 17 years old. From July onwards, you also get an additional $300 a month for your kids between 0 to 5 years old.
Additional Tax Credits
On top of these changes to the CTC are other tax credits for your new child and your other kids. These credits apply to different parent circumstances to help them financially. Make sure to take note of these to include them in your tax preparation steps. After filing, possible delays may take place due to processing changes from the Path Act. A recent update to the Child and Dependent Care Credit entitles your family to a tax credit amounting to 50 percent of the child care expenses spent. The limit allows up to $8,000 per child and a ceiling total of $16,000. New parents also qualify for an Earned Income Tax Credit, but they must meet income limits as well. Those with zero dependents must meet the $15,980 gross income on single filers, while joint filers must meet $21,920. The Annual Gross Income limit is set to $42,158 for single filers and $48,108 for joint filers. A Dependent Care Flex Spending Account covers another additional credit for child care. You can file this through your employer, and you will receive it directly through your paycheck before taxes to help add savings.
Head of Household Status
Another extra tax credit to add to your tax prep is by Filing as Head of Household status. Unmarried parents can file for this tax credit when they file as unmarried for 2021. They need to state that they cover more than 50 percent of house expenses and must live with their registered dependent more than 50 percent of the time. For those who adopted a baby this year, you stand to receive an Adoption Credit & Exclusion Tax Credit. You can receive up to $14,300 in Adoption Tax Credit per child. Any further adoption expenses can also be excluded from your taxes.
Parents are entitled to receive tax credits as ready assistance from the government. The government must update parents for these changes so they can receive them soon and use them for increased expenses during these trying times. To make sure you’re on top of things financially, use thorough tax systems, such as pro-tax software or services that use these systems for error-free and organized tax filing preparations. Keystone Tax Solutions provides professional tax preparation software
to make sure you follow all updates and correct tax information. You can avoid errors that can incur expensive penalties. Call us for professional tax software today.