Article Date:
April 2021

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ARPA Adds Dollars to the Child and Dependent Care Tax Credit

The new American Rescue Plan Act (ARPA) makes major, but temporary, changes to the federal income tax child and dependent care credit (CDCC).


Except for when it comes to high-income taxpayers, the changes are all favorable.


To understand the changes, let’s first review the basics. Here goes.


CDCC Basics


If you have one or more qualifying individuals (usually your children) under your wing, you’re eligible for the CDCC.1


The credit covers eligible expenses that you pay to care for one or more qualifying individuals so you can work, or (if you’re married) so both you and your spouse can work. If you’re married, to claim the CDCC, you generally must file a joint Form 1040 for the tax year in question.


But some married-but-separated taxpayers are exempt from the joint-filing requirement.2


Qualifying individuals are defined as your under-age-13 child, stepchild, foster child, brother or sister, step-sibling, or descendant of any of these individuals. The ... Log in to view full article.

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