Child & Dependent Care Credit – Summer is right around the corner, which if you have children mean you’re already late looking for your kids’ care during the warm months. Are they visiting family in another city?
Will you be staying at home with them?
During the year, school and aftercare programs keep them busy while you work every day. They go from class to perhaps recreational activities and head home for dinner. There’s a routine that’s for the most part seamless. But what to do when there are no more classes and summer camps fees just add to the financial stress?
Don’t worry, your Miami accounting services company is here to shed some light on how you can take advantage of federal tax credit that can ease your financial stresses, especially if you’re trying hard to stay within budget. The Child and Dependent Care Credit is a tax break (not a tax deduction) for those who are working and have someone caring their child who’s under 13 years old. You can certainly file individually, but a married couple must file joint return to claim the Child and Dependent Care Credit.
The applicable credit is 35% of the qualified expenses with an adjusted gross income of $15,000 or less. For each AGI increase, the percentage is decreased by 1% for each $2,000 until it bottoms out at 20%. The Child and Depended Care credit is available for the first $3,000 of qualified expenses for one child, and double that amount for two or more kids.
Earned income is required to qualify for this tax break.
Weekly wages, salaries, tips, even net earnings from self-employment count as earned income. Non-work income such as profits from investments you may have don’t apply.
While you care apply for this tax break if your child is at summer camp, certain types of care don’t qualify. For example, overnight camp or summer school tutoring. If your spouse cares for the child, then you’re not eligible for the tax credit. Even if it’s an ex-wife or ex-husband. The same goes for the care that’s provided by someone you claim as a dependent such the child’s brother.
If filing for this tax credit, your Miami accounting services company remind you that you’ll have to provide the name, address and taxpayer identification number of the person or organization that’s taking care of your child. Both a social security number or employer identification number works.
If you have trouble figuring out whether you’re eligible for the Child and Dependent Care Credit or having difficulty calculating the right amount, contact your Miami accounting services company. We can help answer all of your questions and concerns surrounding this tax break. More importantly, you may be eligible for even more savings related to child care. For example, your employer may already be taking money out of your paycheck before taxes for this purpose and the savings may be greater then with the Child and Dependent Care Credit.
Call your Miami accounting services company today at 305.868.7620. for more info.