Even as some people await their third stimulus check, there are talks and demands for a fourth or even a fifth stimulus payment. But there are other ways you could get a bigger amount, though not initially as a check. Instead, it is in the form of a tax credit, and you could end up with a $16,000 bonanza if you have two children.
And it could come in as early as the 2021 tax season. As with other stimulus payments and the child tax credit, the payments will be linked to the income of the claimants. It is a refundable tax credit to the extent of 50%.
This Stimulus Check Is A Part Of Your 2021 Tax Returns
This stimulus check is based on the amount spent on care for dependents. For instance, if you spend an amount of $16,000 on caring for any of your dependents and owe the IRS, you will get a tax refund for that amount. But it is linked to the gross adjusted income of your household. You get the full amount if it is $125,000 and below. Or you will get 50% of that amount, or $8,000.
The rate goes down further to 20% for those earning $183,000 and above and phases out totally when the income touches $400,000.
Getting The Papers Right For The Claim
The IRS has advised potential applicants to retain all the forms, documents, and receipts of all transactions with nannies, babysitters, camps, and daycare. Even transportation expenses related to this claim will qualify for the claim.
And along with your tax returns next year, complete and attach form 2441 with your 2021 returns to claim your tax credit. The tax credit is fully refundable. So you get the full check even if you owe nothing to the IRS for 2021. And this stimulus check is only for 2021 at present. So you might forego the amount if you do not claim it against your income tax returns next year.
Note that this amount is not linked to the child tax credit as this is a claim of expenses incurred for caring.