Dependent Care Tax Credit
Child and dependant care can be very expensive. However, there are certain cases
where you may claim a deduction on family-related expenses if you are in the process
of looking for a job. Depending on the particulars of the situation, you may reduce
your tax by claiming the Child and Dependent Care Credit on your federal income
tax return for any expenses related to payments made to someone to care for a child
under the age 13, a qualifying spouse, or a dependent.
Please note, in order to qualify, your spouse, children over the age of 13, or other
dependents must be physically or mentally incapable of self-care.
This credit normally will equal a percentage of the amount of work-related child
and dependent care expenses you paid to a care provider. Depending on your level
of income, the credit can be up to 35 percent of your qualifying expenses.
If you exclude or deduct dependent care benefits provided by a dependent care benefit
plan, the total amount you exclude or deduct must be less than the dollar limit
for qualifying expenses (generally, $3,000 if one qualifying person was cared for,
or $6,000 if two or more qualifying persons were cared for).
If two or more qualifying persons were cared for, the amount you exclude or deduct
will always be less than the dollar limit, since the total amount you can exclude
or deduct is limited to $5,000.
These types of credit must follow certain conditions in order to qualify as a deduction:
- You must show income from wages, salaries, tips, or other taxable employee compensation,
or net earnings from self-employment.
- You may not claim payments made to someone
you can claim as a dependent on your return or to your child (under age 19), even
if they are not your dependents.
- Your filing status must be single, married filing jointly, head of household, or
qualifying widow(er) with a dependent child.
- Any payments for care must have been provided for one or more qualifying persons.
- The qualifying person you care for must have lived with you for more than half of
the current tax year.
There are some limitations on the amount of credit you can claim, and if you received
dependent care benefits from your employer, other rules may apply.
More details on the Child and Dependent Care Credit
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