Being a parent can be stressful, both on you and your wallet. Managing parenthood and work can be quite a challenge. While the various expenses may be troublesome to balance, you can thank the IRS for the Child and Dependent Care Tax Credit, and plan to make the most out of it.
Here are some facts you might want to know about the Child Care and Dependent Tax Credit:
- Child care payments made to your child, who is older than 19 or any other relative who is not claimed as a dependent by you or your spouse, can be claimed as expenses for this credit.
- While this tax credit applies only for working taxpayers, any taxpayer whose spouse was a full-time student (who attended college for at least five months in the tax year), will be considered by the IRS to have earned income for each month she/he was a full-time student.
- The child care expenses paid through your employer’s plan will not be part of your taxable income. However, the benefits paid with the pre-tax funds will reduce the amount of your eligible credit.
- Not only daycare or afterschool care expenses qualify, but summer camps or popular summer programs can also be eligible expenses. If tuition costs are separate from child-care expenses, only the child care portion qualifies.
- If you qualify for a portion of the Child Tax Credit, it may result in a refund, even if you do not owe any taxes.
For more information on the tax credit described above, please contact Manasa Vangala at 314-576-1350 or email her at email@example.com.