During the summer months many parents and guardians pay for day camps and childcare while they work. If that’s you, those costs may qualify for a federal tax credit which will lower your taxes. Here are some helpful tips that you should remember about the Child and Dependent Care Credit:
1. Your expenses must be for the care of one or more qualifying persons. Your dependent child or children under age 13 usually qualify.
2. Your expenses for care must be work-related (you pay for care so you can work OR look for work). This rule also applies to your spouse if you file a joint return.
3. You must have earned income, such as from wages, salaries and tips. It also includes net earnings from self-employment. Reminder: If you are filing jointly with your spouse, they must have also earned income. Also, if you’re married you must file a joint return to take the credit. But this rule doesn’t apply if you’re legally separated or if you and your spouse live apart.
4. You may qualify for the credit whether you pay for care at home, at a daycare facility or at a day camp.
5. The credit is a percentage of the qualified expenses you pay. It can be as much as 35 percent of your expenses, depending on your income.
6. The total expense that you can use for the credit in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.
8. Overnight camp or summer school tutoring costs do not qualify. You can’t include the cost of care provided by your spouse or your child who is under age 19 at the end of the year. You also cannot count the cost of care given by a person you can claim as your dependent.
9. Reminder: this credit is not just a summer tax benefit. You may be able to claim it for care you pay for throughout the year.
As tax professional we have to remind you to keep all your receipts and records. Make sure to note the name, address and Social Security number or Employer Identification Number of the care provider. You must report this information when you claim the credit on your tax return.
Have a great summer!!!
1. Your expenses must be for the care of one or more qualifying persons. Your dependent child or children under age 13 usually qualify.
2. Your expenses for care must be work-related (you pay for care so you can work OR look for work). This rule also applies to your spouse if you file a joint return.
3. You must have earned income, such as from wages, salaries and tips. It also includes net earnings from self-employment. Reminder: If you are filing jointly with your spouse, they must have also earned income. Also, if you’re married you must file a joint return to take the credit. But this rule doesn’t apply if you’re legally separated or if you and your spouse live apart.
4. You may qualify for the credit whether you pay for care at home, at a daycare facility or at a day camp.
5. The credit is a percentage of the qualified expenses you pay. It can be as much as 35 percent of your expenses, depending on your income.
6. The total expense that you can use for the credit in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.
8. Overnight camp or summer school tutoring costs do not qualify. You can’t include the cost of care provided by your spouse or your child who is under age 19 at the end of the year. You also cannot count the cost of care given by a person you can claim as your dependent.
9. Reminder: this credit is not just a summer tax benefit. You may be able to claim it for care you pay for throughout the year.
As tax professional we have to remind you to keep all your receipts and records. Make sure to note the name, address and Social Security number or Employer Identification Number of the care provider. You must report this information when you claim the credit on your tax return.
Have a great summer!!!
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