Did you know a child care tax credit is available to help defray the cost of childcare while you work?
A credit against your tax liability of 20 to 35% of qualifying child care expenses is available These expenses are limited to $3,000 for one child and $6,000 for two or more children under the age of 13. The amount of the credit depends on your income.
This credit is limited to the earned income of the taxpayer or spouse whichever is less. However, there is a special exception if your spouse is disabled or a full time student. If you are married, you generally must file a joint tax return in order to get the credit. (As always we will determine the best way to file your return based upon your overall tax position.)
To claim a credit, you must provide the name, address, and social security number (or federal ID# for businesses) for all persons you paid for the childcare.
Childcare expenses that qualify include the cost of childcare provided outside the home. These include expenses for nursery or pre-school programs for children below the level of kindergarten, before or after school care for school age children, and summer day camp programs. (Day camp programs qualify even if they specialize in a particular activity.) Do not include expenses for overnight camp, grade schools, summer school or tutoring programs.
Should you have an individual come to your house to take care of your child, the IRS generally requires they be treated as an employee. You will need to provide a W-2, and pay the related employment taxes. Our office does provide the reporting service if needed.
Please call our office if you have any questions about the child care tax credit or your reporting responsibilities.
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