Posted on | June 18, 2014 | Comments Off on Find Out How To Make Your Child Care Expenses Work For You
Get tax credit this summer for your dependent care and child care costs
A lot of adults pay for day camps or child care during the summer months when they have to go to work. If you are a parent who covers these costs, you may be qualified to receive a federal tax credit that will reduce your taxes. Following are several important facts about the Child And Dependent Care Tax Credit:
1. You must be paying child or dependent care costs for at least one qualifying person. Dependent children or those who are below the age of thirteen will often qualify. To learn more about this rule, see the IRS publication 503 for Child and Dependent Care expenses.
2. These expenses have to be related to your work. Thus, you must pay for this care in order to maintain a job or look for one. If you and your spouse are filing a joint return, this rule will also apply to your spouse. A spouse can meet this requirement in any month in which he or she is enrolled as a full-time student. A spouse can also meet this requirement if he or she is mentally or physically incapable of self-care.
3. It will be necessary to have earned income, such as monies that come in the form of wages, tips or your normal work salary. If filing jointly with your spouse, this individual must also have income as well. Any month that your spouse is enrolled as a full-time student or incapable of caring for his or her self, this can be counted as earned income. This rule is also applicable to you if filing jointly. Check out IRS publication 503 for additional info.
4. If you are married you will need to file jointly in order to use this credit. This rule is not applicable, however, if you have left your spouse and live separately or if you are legally separated.
5. You could be qualified for this credit whether you pay for child care at home, at a day camp or at a daycare facility.
6. The credit is representative of a percentage of the qualified child or dependent care expenses that you pay. It can be up to 35% of your expenses, as determined by your income level.
7. The total expense that is applicable for this credit annually is limited. $3k is the limit for one qualified individual and $6 is the limit for two parties or more.
8. School tutoring costs, summer school costs and overnight camp charges are not qualified expenses. You will not be able to include the costs of care if this care is provided by a a child below the age of 19 or by your spouse. You may not claim a child as a dependent and claim the cost of any care that this child provides. There are special rules concerning dependent care benefits that employers provide.
9. Diligently maintain your records and receipts. Take note of the address, name and employer identification number or social security number of the individual who provides care. This information will need to be reported when filing your return and claiming this credit.