If you and your spouse (if filing jointly) pay child care expenses, these expenses may be eligible for the Child and Dependent Care Credit.
In order to claim child care expenses, however, both the taxpayer and spouse must work, be actively looking for work, or be a full-time student.
The credit is available for those who have earned income during the year. The child must be under the age of 13 or was not physically or mentally able to care for himself.
In order to claim the credit, the child must be a qualifying child who lived with the taxpayer for more than half the year.
Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are allowable expenses. In addition care for a child before and after school is an eligible expense for the credit. Day camp such as summer camp is eligible as long as the camp is not an overnight camp.
Application fees and deposits are considered indirect expenses and may be eligible for the credit. The taxpayer may count payments made to relatives as long as they are not the taxpayer’s dependents.
The taxpayer must obtain the following information in order to take the credit: name, address, and care provider’s identification number, either social security number or employer identification number.
If the care provider is a tax-exempt organization, such as a church or school, the care provider’s identification number is not needed, enter “Tax-exempt” in the space on the Child and Dependent Care Credit Form (Form 2441).
If the taxpayer’s employer pays a portion of the child care expenses, the amount paid by the employer must reduce the amount of expenses claimed. The dollar limit for this credit is $3,000 for one qualifying child or person, or $6,000 for two or more persons.
This credit is also available for dependents who are older than the tax payer and are disabled. It is also available to care for a spouse who is not physically or mentally able to care for him/herself.
The credit is based on the adjusted gross income and can be between 20 percent and 35 percent of total expenses paid.
To learn more about the Child and Dependent Care Credit go to the IRS website at www.irs.gov and type Child and Dependent Care Credit in the search box.
Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or at email@example.com.