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Don’t Overlook the Child and Dependent Care Tax Credit

3/20/2014

 
Many people pay for the care of their child or other dependent while they’re at work.  The Child and Dependent Care Credit can reduce that cost.  Here are 10 facts from the IRS about this important tax credit:

1.  You may qualify for the credit if you paid someone to care for your child, dependent or spouse last year.

2.  The care you paid for must have been necessary so you could work or look for work.  This also applies to your spouse if you are married and filing jointly.

3.  The care must have been for ‘qualifying persons.’  A qualifying person can be your child under age 13.  They may also be a spouse or dependent who is physically or mentally incapable of self-care.  They must also have lived with you for more than half the year.

4.  You, and your spouse if you file jointly, must have earned income, such as wages from a job.  Special rules apply to a spouse who is a student or disabled.

5.  The payments for care can’t go to your spouse, the parent of your qualifying person or to someone you can claim as a dependent on your return.  Care payments also can’t go to your child under the age of 19, even if the child isn't your dependent.

6.  The credit is worth up to 35 percent of the qualifying costs for care, depending on your income.  The limit is $3,000 of your total cost for the care of one qualifying person.  If you pay for the care of two or more qualifying persons, you can claim up to $6,000 of your costs.

7.  If your employer provides dependent care benefits, special rules apply. For more see Form 2441, Child and Dependent Care Expenses.

8.  You must include the Social Security number of each qualifying person to claim the credit.

9.  You must include the name, address and identifying number of your care provider to claim the credit.  This is usually the Social Security number of an individual or the Employer Identification Number of a business.

10.  To claim the credit, attach Form 2441 to your tax return. If you use IRS e-file to prepare and file your return, the software will do this for you.

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  • Home
  • About
    • Book An Appointment
  • Accounting
    • Dashboard
    • Xero+Accountency
    • Xero Intro
    • AutoMagical Accounting
    • QuickBooks >
      • QuickBooks Updates
    • Store
  • Payroll
  • Taxes
    • Dashboard
    • Individuals
    • Businesses
    • Tax Stuff >
      • Individuals >
        • Income >
          • Debt Forgiveness
          • Foreign Income
          • Gambling Income
          • Unemployment
          • Other Income
        • Deductions & Credits >
          • Adoption
          • Charitable Contributions
          • Earned Income Tax Credit
          • Educational Expenses
          • Energy Tax Credits
          • Employee Business Expenses
          • Other Deductions and Credits
        • Affordable Care Act - Individuals
        • Children and Dependents
        • Death
        • Disabled Taxpayers
        • Educators
        • Health Care
        • Identify Theft
        • Marriage and Divorce
        • Military
        • Real Estate
        • Retirement Savings
        • Seniors
        • State Taxes
        • Record Keeping
        • Who Must File
        • Other Topics
      • Businesses >
        • Affordable Care Act - Businesses
        • Year-end Reporting Obligations >
          • 1099's
          • Health Insurance Premiums
          • Depreciation
          • Reimbursed Employee Business Expenses
          • Company Automobiles
        • Employment Tax Credits
        • Independent Contractors
        • Tax Credits and Deductions for Businesses
        • Other Business Topics
        • Required Business Posters
      • Amended Returns
      • IRS Notices and Problems
      • Tax Plan >
        • All About the Earned Income Tax Credit
        • 5 IRS Audit Red Flags
        • Retirement Plans for Sole Proprietors
        • Are You Claiming All of Your Tax-Deductable Business Expenses for 2015?
        • All About Past Due Tax Returns
        • Do You Need to File Form 1099s?
        • How to File an Appeal with the IRS
        • Why You Might Get a Letter from the IRS, and What to Do
        • How to File an Amended Tax Return
        • Should You Claim the Home Office Deduction?
        • How to Avoid -- And Deal with -- Identify Theft
        • Q & A: IRS Audits
        • Are You Using the Right Business Structure?
        • Starting Planning for 2015 Income Taxes Now: 5 Tips
        • What You Need to Know About Estimated Taxes
        • Contractor or Employee? How the Income Tax Obligations Differ
        • The New Form 1095-A: Reporting Health Insurance Coverage
        • Are Your Social Security Payments Taxable?
        • Do You Qualify for the Earned Income Tax Credit?
        • Are You Eligible for Health Insurance Tax Credits
        • Employee Retirement Plans - Tax Advantages and Other Benefits
        • 5 Business Tax Credits You May Be Missing
        • New Business in 2012
        • Is it a Bad Debt or a Simple Revenue Loss? Telling the Difference
        • Business Taxes Add Complexity: How Will This Affect You?
      • Tax Scams