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.

Gambling and taxes – what should you report?

Gambling is something that many people enjoy doing either on a regular basis or now and again. Of course, gambling is a much more enjoyable pastime when you are winning rather than losing! However, if you are one of the lucky ones on a winning streak you need to bear in mind that you’re probably going to have to give a slice of your good luck to the IRS, as it will be classed as taxable income.

In many cases, if you have been lucky enough to win a big jackpot the payer will actually deduct taxes from your winning upfront and the information will be issues to you via the W-2G form. The amount of money that you have won, and the type of gambling that you won it on, will determine whether the payer gets involved in taking your details and withholding part of your winnings for the taxman.

When you have bagged larger sums of money by way of winnings the payer will need to take your social security number to let the IRS know that you have come into some additional ‘income’. In some cases they will take the 25 percent tax from your winnings before you get your money. If you do not provide your social security details the payer could withhold as large an amount as 28 % of the winnings, so it is advisable to cooperate and furnish the casino with the necessary information.

Of course, you may only have won a small amount with your gambling, which will not warrant the payer to take your details and inform the IRS. However, in order to ensure that you are paying your taxes by the book you will still need to declare these winnings. Both big jackpots and smaller winnings can be reported under the ‘other income’ section of Form 1040. You can also supply details here of any taxes that were paid upfront on your winnings through deductions made by the payer, which will be detailed on the W-2G form.

The good news is that whilst you have to pay tax on your gambling winnings you are also able to deduct tax on your losses. So, unless you struck really lucky and scored a big jackpot with your very first bet you can recoup some or even all of the money that you pay on taxes on your winnings based on how much you lost on your gambling.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to mortgage loans.

Save Yourself Money by Taking Advantage of TaxACT

Save Yourself Money by Taking Advantage of TaxACT

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Saving yourself the unnecessary fees other companies charged would not be worth the investment if the service you receive is not the best … Read more at 2009 Tax.

Save Yourself Money by Taking Advantage of TaxACT

TaxACT is a great tax service that you should take advantage of. It does not require any download or purchase, simply sign in and answer some questions to have your taxes done for you. Not only will this save you the $30-$100 most tax companies will charge you, but TaxACT also uses the best up to date programs to ensure that you will get the largest refund possible.

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