Keeping up with all the new tax credit policies for 2021? Here are two to keep on your radar.
Child Tax Credit
The Biden administration has begun to push awareness of the new Child Tax Credit (CTC), part of the American Rescue Plan Act (ARPA) signed into law earlier this year. With increases in credit and advance payments available, the Biden administration is hoping to boost participation as well as make the changes permanent.
While currently temporary, the ARPA expansion of the CTC includes a fully refundable credit, regardless of earned income on their 2021 taxes; an increase from $2,000 to $3,600 for children under six, and $3,000 for children under eighteen; and the ability to receive advance payments of the credit from July 1 through December 31, 2021.
It also increased the age of coverage to include seventeen-year-old children, and extended access to residents of Puerto Rico and U.S. territories.
Paid-Leave Tax Credit
ARPA also includes a paid-leave tax credit for employers who choose to provide paid sick or family leave to their eligible employees. The Small Business Administration states that about 6 million businesses and nearly 30 million workers are eligible for this credit.
Your company could be eligible if it has has provided paid leave or family leave for employees experiencing or providing care to a family member who is experiencing Covid-19 exposure or symptoms; awaiting a diagnosis of Covid-19; receiving a Covid-19 vaccine or recovering from a vaccine; or caring for a child whose school or day care has been closed or is unavailable due to Covid-19.
The tax credit applies to employers with fewer than 500 employees and includes up to $17,110 to provide employees with up to 10 days of paid sick leave and up to 12 weeks of paid family leave, within April 1 – Sept. 30, 2021. It can also apply to certain government employers and self-employed individuals. Details are available at the IRS website.