You can minimize the amount of taxes you pay by using the Child and Dependent Care Tax Credit. Did you pay someone to look after anyone in your home while you worked or were looking for work?
If you paid someone to care for your child, spouse, or dependent last year, you might be able to claim the Child Care Credit.
The Following 8 IRS Facts are Vital to the Child Care Tax Credit.
1. Job Associated Costs. The care would be required if you were working or looking for work. For those married, the care would have to be necessary for your spouse to work or seek work. A disabled spouse or one that is a full-time student would not qualify.
2. Qualifying Individual. The care must have been for a “qualifying person” such as a child under 13 years old, a spouse or dependent who lived with you for over 6 months and is unable to care for themselves due to mental or physical issues.
3. Earned Salary. You must have generated income for the year, such as earnings from a job. For those married who have filed a joint tax return, your spouse would also have to earn income. There are special rules for a student or disabled spouse.
4. Credit Proportion / Cost Perimeters. As much as 35% of allowable expenses is what the credit would be worth. The percentages will change according to your income. For the paid care of a single qualifying person, the limit of the allowable expense is $3,000. If you paid for care of 2 or more individuals, the limit stays at $6,000
5. Benefits of Dependent Care. Did you get dependent care benefits from your employer? Then special rules come into play. See Form 2441 Child and Dependent Care Expenses and for additional rules.
6. SSN of Qualifying Person. The Social Security Number for each qualifying person must be included to claim the credit.
7. Information of Care Provider. When filing your tax return, you must include the name, address, and the identification number of the taxpayer.
8. Claim Form 2441. To claim your credit, be sure to include Form 2441.
How to Calculate the Child Care Tax Credit
The Dependents Tax Credit Calculator will give you an accurate view of how much you could be entitled to.
Just answer some simple questions regarding your income and your living circumstances, and you’ll get a readout on how much you may be eligible for.
It’s easy to claim all of the tax credits you deserve when you prepare your tax return online. The online software will choose the correct credits for you based on your answers to some simple questions.