Last week, a woman called me asking if Agudah was aware of any government grants for day camp tuition. She needs to send her son to a day camp this summer, but could not afford the tuition. The very next day, an accountant responded to this newsletter by sharing with me the June 2nd IRS COVID Tax Tip. In it, the IRS details how, for 2021 only, qualifying families may be eligible to receive up to $8,000 as a refundable tax credit to cover employment-related childcare expenses including…day camp tuition!
The (currently) single-year enhancements to the Child and Dependent Care tax credit were included in the American Rescue Plan Act enacted earlier this year. The changes include a significantly higher tax credit amount and allows qualifying families earning up to $125,000 to receive the 50% tax credit before it begins to phase out.
The credit is available when both parents are working or looking for work, and there are special rules when a parent is incapable of caring for themselves or if a parent is a full time student. Please speak to your tax advisor about whether or not the credit applies to your situation. Please help spread the word and share this information. On Friday morning, the IRS released an updated FAQ page here.
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This credit is an addition to the enhancements to the separate Child Tax Credit which will lead to monthly payments for qualifying families beginning July 15th. Those payments will be up to $300 per month for each qualifying child under age 6 and up to $250 per month for each qualifying child ages 6 to 17. More details about that program can be found on the IRS website here.