The Internal Revenue Service (IRS) published Publication 503 for use in preparing 2022 tax returns, which describes the tests a taxpayer must meet in order to claim the credit for child and dependent care expenses and explains how to calculate and claim the credit.
The Details:
Under the “What’s New” Section, the 2022 Publication 503 states as follows:
The 2021 enhancements to the credit for child and dependent care expenses have expired. The changes to the credit for child and dependent care expenses for 2021 under the American Rescue Plan Act of 2021 have expired. For 2022, the credit for child and dependent care expenses is nonrefundable and you may claim the credit on qualifying employment-related expenses of up to $3,000 if you had one qualifying person, or $6,000 if you had two or more qualifying persons. The maximum credit is 35% of your employment-related expenses. The more you earn the lower the percentage of employment-related expenses that are considered in determining the credit. Once your adjusted gross income is over $43,000, the maximum credit is 20% of your employment-related expenses.
The 2021 enhancements to dependent care benefits have expired. The changes to dependent care benefits under the American Rescue Plan Act of 2021 have expired. For 2022, the maximum amount that can be excluded from an employee’s income through a dependent care assistance program is $5,000 ($2,500 if married filing separately). Dependent care benefits are reported on Form 2441, line 12.
Temporary special rules for dependent care flexible spending arrangements (FSAs). Section 214 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides temporary COVID-19 relief for dependent care FSAs. This legislation allows employers to amend their dependent care plan to allow unused amounts to be used in a subsequent year. Unused amounts from 2020 and/or 2021 are added to the maximum amount of dependent care benefits that are allowed for 2022.
For a copy of Publication 503 (Child and Dependent Care Expenses (for 2022 Returns), please click on the link provided below:
https://www.irs.gov/pub/irs-pdf/p503.pdf
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