In fact, things can get so overwhelming that we just bury our head in the sand and let the chips fall where they may. But I’m here to tell you, there’s something else. This year, it is more important than ever to pay attention because the changes outlined in the American Rescue Plan can mean thousands more dollars for your children and create some significant negotiating tools in divorce.
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Changes For Divorcing Families With Children
For families with children the most important changes are with the Child Tax Credit, the Child Care Credit and the Earned Income Credit. All of these are designed to help children in the 2021 tax year as we struggle through recovering from the consequences of a global pandemic that included many people losing their employment or facing minimal hours of work.
Here is a very simplified look at some of what’s at stake. The Child Tax Credit can be worth up to $3,600 in refunds per child for a divorcing parent that earns $112,000 or less annually. The Child Care Credit can be worth up to $4000 in refunds per child for the parent paying childcare expenses. The Earned Income Credit can provide a significant boost to the parent that is just getting back into the work force this year, especially if your children are still minors.
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What You Need To Know
The important thing is to find out how this affects you as you go through divorce this year. Especially because these changes are currently only effective for 2021. So, fight that urge to put things off and contact a Certified Divorce Financial Analyst® like us at Smarter Divorce Solutions.
As a CDFA® practitioner, we can help you sort through things and talk about strategic ways to maximize the credits and deductions for you and your soon to be ex-spouse to the best benefit of the children.
This can be a very stressful process. So, take one step at a time. For an early step that can make this whole process easier for you, contact us with any questions you have.
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