Don’t overlook the Child and Dependent Care Tax
Credit. It can reduce the taxes you pay. Here are 10 facts from the IRS about
this important tax credit:
1. Child, Dependent or Spouse. You
may be able to claim the credit if you paid someone to care for your child,
dependent or spouse last year.
2. Work-Related Expense. The
care must have been necessary so you could work or look for work. If you are
married, the care also must have been necessary so your spouse could work or
look for work. This rule does not apply if your spouse was disabled or a
full-time student.
3. Qualifying Person. The care
must have been for “qualifying persons.” A qualifying person can be your child
under age 13. A qualifying person can also be your spouse or dependent who
lived with you for more than half the year and is physically or mentally incapable
of self-care.
4. Earned Income. You must have earned
income for
the year, such as wages from a job. If you are married and file a joint tax
return, your spouse must also have earned income. Special rules apply to a
spouse who is a student or disabled.
5. Credit Percentage / Expense Limits. The
credit is worth between 20 and 35 percent of your allowable expenses. The
percentage depends on the amount of your income. Your allowable expenses are
limited to $3,000 if you paid for the care of one qualifying person. The limit
is $6,000 if you paid for the care of two or more.
6. Dependent Care Benefits. If
your employer gives you dependent care benefits, special rules apply. For more
on these rules see Form
2441, Child
and Dependent Care Expenses.
7. Qualifying Person’s SSN. You
must include the Social Security number of each qualifying person to claim the
credit.
8. Care Provider Information. You
must include the name, address and taxpayer
identification number of your care provider on your tax return.
10. IRS Free File. You can use IRS
Free File to
prepare and e-file your federal tax return, including Form
2441, Child and Dependent Care Expenses, for free. Free File is the fastest and
easiest way to file your tax return and it’s only available at IRS.gov/freefile.
Each and every taxpayer has a set of fundamental
rights they should be aware of when dealing with the IRS. These are your Taxpayer
Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
Additional IRS
Resources:
Tax
Topic 602 -
Child and Dependent Care Credit
Publication
503, Child and Dependent Care
Expenses
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