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Increased NJ Child Care Credit for 2021!

December 22, 2021 by Pamela Avraham

More NJ families will benefit in 2021 from the 

Child and Dependent Care Credit.

The taxable income threshold has increased to $150,000, from $60,000 in 2020. Resident taxpayers who are allowed a federal child tax credit are eligible for a credit against their NJ gross income tax

The credit will reduce the amount of New Jersey Gross Income Tax a taxpayer owes and may result in a refund even if no taxes are owed. Taxpayers may be able to claim the New Jersey Child and Dependent Care Credit if they:

  • Paid expenses for the care of one or more qualifying individuals so that they are able to work or actively look for work;
  • Are allowed the federal child and dependent care credit; and
  • Have New Jersey taxable income of $150,000 or less.

The amount of the NJ credit is a percentage of the taxpayer’s federal child and dependent care credit and varies according to the amount of the taxpayer’s NJ taxable income.

                                                        Tax Year 2021
        NJ taxable income                  NJ Credit
            0 to $30,000  50% of federal credit
         $30,001  to   $60,000 40% of federal credit
         $60,001  to   $90,000 30% of federal credit
          $90,000  to   $120,000 20% of federal credit
         $120,001 to $150,000 10% of federal credit

This increased child care credit provides more relief to working families and is only for 2021.

 

Filed Under: TAX TIPS FOR INDIVIDUALS Tagged With: Child Care Credit, NJ Income Taxes

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