Tax Tips from Marietta - Child Care Expenses

Qualify for the Child/Dependent Care Credit and claim summer day camp and childcare expenses.

Need to reduce the amount of tax that you owe? Well … you may be able to claim a credit if you pay someone to care for a dependent under the age of 13, or for your spouse or dependent who is not able to care for himself or herself. The credit can be up to 35 percent of your expenses. To qualify, you must pay these expenses so that you can work or look for work. Here are some things you need to know:  

·         The cost of day camp may count as an expense towards the Child and Dependent Care Credit. Keep in mind that expenses for overnight camps do not qualify.

·         You must have paid the child and dependent care expenses so that you (and your spouse, if filing jointly) could work or look for work. If you do not find a job and have no earned income for the year, you cannot take this credit.

·         You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. If you make payments to your child, he or she cannot be your dependent and must be aged 19 or older by the end of the year.

·         If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer who has to pay employment taxes. Usually, you are not a household employer if the person who cares for your dependent or spouse does so at his or her home or place of business.

·         If you pay expenses to a sitter at your home or a daycare facility outside the home to provide child care, you may get some tax benefit if you qualify for the credit. You will need the name of the child care provider, the address, the identification number, i.e. Social Security number or Employer Identification Number and the total amount paid.

·         If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Your employer will be able to tell you whether your benefit plan qualifies. There are limits to the amount that can be excluded from your income.  

Be sure to take advantage of this credit if you are eligible. _________________________________________________
Here’s a list of helpful IRS forms and publications:

·      Form 2441, Child and Dependent Care Expenses

• Form W-10, Dependent Care Provider’s Identification and Certification

Contact me with any questions or for more information.

Marietta Z. Courtney, CPA, MST

http://courtneycpa.com