June 2nd, 2021

Its not too early to look ahead to what’s in store for tax season 2021. COVID reliefs will impact tax returns for years! Here is a list of a few key updates for 2021:

Child and Dependent Care Credit

You may have received increased amounts of the credit and eligible expenses for dependent care.

For 2021, the top credit percentage of qualifying expenses increased from 35% to 50%. In addition, eligible taxpayers can claim qualifying child and dependent care expenses of up to:

  • $8,000 for one qualifying child or dependent, up from $3,000 in prior years, or
  • $16,000 for two or more qualifying dependents, up from $6,000 before 2021.

Dependent Care FSA

If your employer offers a dependent care FSA, that can include tax-free benefits of $10,500, up from $5,000!. But, your employer must adopt this change, so speak with your HR department before you spend anything.

Childless EITC Credit

In 2021, the maximum EITC for those with no dependents is $1,502, up from $538 in 2020. Available if your AGI is below $27,380 in 2021, and it can be claimed by eligible workers who are at least 19 years old. In the past, the EITC for those with no dependents was only available to people ages 25 to 64. Full-time students under age 24 don’t qualify.

Child Tax Credit

Currently, the credit is worth up to $2,000 per eligible child, this year it increases to as much as $3,000 per child for dependents ages 6 through 17, and $3,600 for dependents ages 5 and under. The maximum credit is available to taxpayers with a modified AGI of:

  • $75,000 or less for singles,
  • $112,500 or less for heads of household and
  • $150,000 or less for married couples filing a joint return and qualified widows and widowers.

Additionally, low and moderate income families may be eligible for an advance on this credit for the last half of year! The IRS will soon share materials and information on social media and by email on this, but you can read more now on their website!

We have staff ready to help get you caught up. Call us for an appointment!