How does the tax system subsidize child care expenses? Q.How does the tax system subsidize child care expenses? A.Working parents are eligible for two tax benefits to offset child care costs: the child and dependent care tax credit and the exclusion for employer-provided child care. The credit benefits only a small share of parents because relatively few have formal child care expenses that qualify for the credit. Read more about How does the tax system subsidize child care expenses?
Can poor families benefit from the child tax credit? Q.Can poor families benefit from the child tax credit? A.Yes. Low-income families can receive a refundable child tax credit equal to 15 percent of earnings above $2,500, up to a maximum credit of $1,600. Read more about Can poor families benefit from the child tax credit?
How did the 2021 American Rescue Plan Act Change the Child Tax Credit? Q.How did the 2021 American Rescue Plan Act Change the Child Tax Credit? A.For 2021, the child tax credit provided a credit of up to $3,600 per child under age 6 and $3,000 per child from ages 6 to 17. If the credit exceeded taxes owed, families could receive the excess amount as a refund. From July 2021 to December 2021, half of the credit was automatically paid on a monthly basis to most families in advance of their filing a tax return. Families could opt out of advance payments. Read more about How did the 2021 American Rescue Plan Act Change the Child Tax Credit?