Posts Tagged ‘Child Care Expenses’

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Potential Tax Credit for the Cost of Summer Child Care Activities

Friday, July 6th, 2012

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.

While this may the time of the year for your children to enjoy their vacation from school, the daily work schedule continues for those who care and provide for them.   In some cases the costs can be many times greater than the regular “after school” costs during the school year.  If the requirements and qualifications in IRS Publication 503 (“Child and Dependent Care Expenses”) are met, you may be able to deduct these costs and receive a tax credit (dollar for dollar reduction of your income taxes) when you file your income tax return this year.  This link will provide the details:  http://www.irs.gov/pub/irs-pdf/p503.pdf

The following section provides a  brief summary of the provisions for this tax law:  

Keep the Child and Dependent Care Tax Credit in Mind for Summer Planning

During the summer many parents may be planning the time between school years for their children while they work or look for work. The IRS wants to remind taxpayers that are considering their summer agenda to keep in mind a tax credit that can help them offset some day camp expenses.

The Child and Dependent Care Tax Credit is available for expenses incurred during the summer and throughout the rest of the year.   Here are six facts the IRS wants taxpayers to know about the credit:

1.   Children must be under age 13 in order to qualify.

2.   Taxpayers may qualify for the credit, whether the childcare provider is a sitter at home or a daycare facility outside the home.

3.   You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

4.   The credit can be up to 35 percent of qualifying expenses, depending on income.

5.   Expenses for overnight camps or summer school/tutoring do not qualify.

6.   Save receipts and paperwork as a reminder when filing your 2012 tax return. Remember to note the Employee Identification Number (EIN) of the camp as well as its location and the dates attended.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links: IRS Publication 503, Child and Dependent Care Expenses

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Important Information for All Parents

Tuesday, January 24th, 2012

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

IRS Reminds Parents of Ten Tax Benefits 

Your kids can be helpful at tax time. That doesn’t mean they’ll sort your tax receipts or refill your coffee, but those charming children may help you qualify for some valuable tax benefits. Here are 10 things the IRS wants parents to consider when filing their taxes this year.

1. Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.

2. Child Tax Credit You may be able to take this credit for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit.

3. Child and Dependent Care Credit You may be able to claim this credit if you pay someone to care for your child or children under age 13 so that you can work or look for work. See IRS Publication 503, Child and Dependent Care Expenses.

4. Earned Income Tax Credit The EITC is a tax benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. IRS Publication 596, Earned Income Credit, has more details.

5. Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. If you claim the adoption credit, you must file a paper tax return with required adoption-related documents.  For details, see the instructions for IRS Form 8839, Qualified Adoption Expenses.

6. Children with earned income If your child has income earned from working, they may be required to file a tax return. For more information, see IRS Publication 501.

7. Children with investment income Under certain circumstances a child’s investment income may be taxed at their parent’s tax rate. For more information, see IRS Publication 929, Tax Rules for Children and Dependents.

8. Higher education credits Education tax credits can help offset the costs of higher education. The American Opportunity and the Lifetime Learning Credits are education credits that can reduce your federal income tax dollar-for-dollar. See IRS Publication 970, Tax Benefits for Education, for details.

9. Student loan interest You may be able to deduct interest paid on a qualified student loan, even if you do not itemize your deductions. For more information, see IRS Publication 970.

10. Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage for any child of yours who was under age 27 at the end of the year, even if the child was not your dependent. For more information, see the IRS website.

Forms and publications on these topics are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

 

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Are The Costs for Summer Day Camps Tax Deductible?

Thursday, July 14th, 2011

The summer months are traditionally some of the best times of the year for those who are 18 and younger.  However, these school vacation months  can present some special “challenges” for parents, especially if both are working full time jobs.  Parental creativity usually will provide several different solutions, including trips to visit with the grandparents, relatives, friends, neighbors etc.  Other alternatives include an extended two to three week trip to Camp Woodchuck or it can just be a daily visit to one of the local “day camps” that are located nearby.  If you have selected the last option for your children, some of the costs may be deductible on your income tax return.

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Child and Dependent Care Tax Credit

Sunday, March 13th, 2011

Ten Things to Know About the Child and Dependent Care Credit 

If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses.

  1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
  2. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.
  3. You – and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.
  4. The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your tax return.
  5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
  6. The qualifying person must have lived with you for more than half of 2010. There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents. See Publication 503, Child and Dependent Care Expenses.
  7. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.
  8. For 2010, you may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
  9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.
  10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer and may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. See Publication 926, Household Employer’s Tax Guide.

For more information on the Child and Dependent Care Credit, see Publication 503, Child and Dependent Care Expenses. You may download these free publications from http://www.irs.gov or order them by calling 800-TAX-FORM (800-829-3676).

Links:

  • Publication 503, Child and Dependent Care Expenses (PDF 167K)
  • Form W-10, Dependent Care Provider’s Identification and Certification (PDF 31K)
  • Form 2441, Child and Dependent Care Expenses (PDF)
  • Form 2441 Instructions (PDF 32K)
  • Publication 17, Your Federal Income Tax (PDF 2,075K)
  • Tax Topic 602
  • Publication 926, Household Employer’s Tax Guide

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