President Joe Biden signed the $1.9 trillion American Rescue Plan in mid March, marking another set of Covid relief legislation. The bill is loaded with provisions that will increase the professionalization of the industry, and that means major perks for nannies and families.
So, what can nannies and families expect?
We’re breaking down some key parts of the bill that apply to our Westside Nannies community.
Benefits for Nannies
Nannies can expect a few types of financial support from the bill. Whether you’re currently working or unemployed, there are a few provisions to keep on your radar.
The American Rescue Plan includes a third round of relief checks, and the amount is the highest so far. Individuals who earn up to $75,000 per year will receive direct payments of $1,400 in the coming weeks. Similar to the other relief checks, these payments will arrive via check or be deposited directly into your bank account. Most nannies can expect to receive the full $1,400, as well as an additional $1,400 per dependent.
Individuals receiving state unemployment benefits will receive an extra $300 for another six months. So, if you’re a nanny currently receiving unemployment payments, you can expect this boost through August 19, 2021.
Earned Income Tax Credit (EITC)
The earned income tax credit, or EITC, reduces the tax burden for working parents. While the specific tax benefit varies by income and number of children, many nannies will benefit from this provision. In some cases, the EITC may reduce a worker’s tax burden to zero or earn them a tax refund. You can check if you qualify for the EITC on the IRS website.
Saying that the pandemic had a major impact on nannies is an understatement. This relief bill may be a significant step forward for nannies and their families, providing some financial relief as their challenges continue.
Benefits for Families
Supporting your family during a pandemic is no easy feat. The American Rescue Plan has several important items that families should be aware of. Here are some of the highlights.
Dependent Care Account Increase
A Dependent Care Account is a type of flexible spending account (FSA) designated for family care expenses. The American Rescue plan increases the amount in these FSAs from $5,000 to $10,500 for the 2021 tax year. What does this mean for families with care expenses? It could yield between $4,000 and $4,400 in savings.
Child or Dependent Care Tax Credit
Don’t have a Dependent Care Account? You won’t have to miss out on savings. Child or Dependent Care Tax Credit (CDCTC) helps families afford child and senior care. So, if you hire a nanny, this provision may help you afford ongoing care for your child.
Families will note an increase in the expense limits for the CDCTC. Specifically, the American Rescue Plan moved the limit from $3,000 to $8,000 for families with one child and $6,000 to $16,000 for families with more than one child.
Families should also note that the credit percentage will also increase. And while families with higher incomes will see a lower credit percentage, this provision can still have a major impact. Families could see their savings double, or even triple, due to the tax break.
Additional Paid Sick Leave
At the start of the pandemic, many individuals wondered what they would do if they or one of their family members became sick. The American Rescue Plan builds on the subsidized paid sick or family leave policy that the Families First Coronavirus Relief Act (FFCRA) put in place.
The plan provides an additional 10 days of subsidized paid leave, up to $12,000, from March 21, 2021 until October 1, 2021 for qualifying COVID-related reasons. However, employers are no longer required to provide this leave.
Families and nannies alike are continuing to feel the impact of the Covid-19 pandemic. Here at Westside Nannies, we want to make sure that our community is informed of any legislation that may offer financial relief.