Regardless of whether you paid for after-class child care during the school year or a week of day camp during summer break, you may be able to apply the costs to the Child and Dependent Care tax credit and use it to cut your tax bill at filing time.
The Child and Dependent Care tax credit can help make employment possible when child care is essential. Donâ€™t miss out on claiming this federal tax credit if you qualify. Although the credit will probably not pay for all of your child care costs, it can cover up to 35 percent of your actual care costs.
To get help with paying for the cost of summer day-camp and child care expenses throughout the year, here are some things you should know about the Child and Dependent Care Credit.
- You must pay child and dependent care expenses so you (and your spouse, if filing jointly) can work or look for work.
- 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.
- If your child care is provided by a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
- The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
- 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.
To claim the credit on your tax return, you will need the name of the child care provider, their address, the identification number, (i.e. Social Security number or Employer Identification Number) and the total amount paid. If you are unsure of any of the information, request that your child care provider complete Form W-10, Dependent Care Providerâ€™s Identification and Certificaton. There are certain restrictions regarding payments to relatives or dependents.
Every year, millions of families fail to claim federal tax credits they are eligible for, leaving billions of dollars unclaimed. If you are eligible, make sure that you receive the Child and Dependent Care Credit.
For more information, check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available on the IRS website, IRS.gov, or by calling 800-TAX-FORM (800-829-3676).
Go to CLG Professional Services to have your tax needs taken care of.