There are two major changes to this tax credit. The first one is that the amount of the tax credit allowed has increased significantly in the past, taxpayers were limited to $3,000 for child care expenses for one dependant and $6,000 for two dependants. For this year, the amount is $8,000 for one dependent child and $16,000 for two dependents. It also includes out-of-pocket expenses for childcare, daycare or any type of dependent care.
The second major change is that the credit is fully refundable as long as taxpayers meet certain requirements. This means that taxpayers can get the full amount of the credit even if they pay no tax.
Taxpayers who had low to moderate incomes and no tax liability when they filed their tax return never saw any benefit from the credit. But this year, now that the credit is fully refundable, they can benefit.
