Child and Dependent Care Credit

With the end of summer and start of the school year, determining what expenses qualify for the Child and Dependent Care Credit can save you money come tax time. The Child and Dependent Care Credit applies to expenses incurred for the care of a child, spouse, or dependent while you (and spouse if filing jointly) are working, searching for work, or attending school. The credit can apply to summer camp, day care, and/or any combination of care necessary for the care of your qualifying dependent. The credit allows for $3,000 for one qualifying dependent and $6,000 for two or more qualifying dependents (income limits apply). By applying the credit, you reduce the amount of federal income tax that is owed.

What are the Qualifications?

Many expenses are considered a qualifying expense.  Examples include child care, babysitter, before and after care, summer camps, and household services.  Refer to Publication 503, Child and Dependent Care Expenses, for detailed information.

Things to Consider

Below is a list of things to consider if you want to apply the credit to your income tax return (as detailed by the IRS):

1. Individual must be considered a qualifying person. A qualifying person can be your dependent child(ren) who are 12 years or younger, a spouse, and/or a disabled dependent.
2. In order to receive the credit, you (and spouse if filing jointly) must have earned income (such as wages, salaries from a job, tips).
3. You must identify on your tax return the name of the individual or institution that provided the care, the address, and the taxpayer identification number on your tax return.
4. The individual or institution providing the care must not be your spouse, a dependent, or the child’s parent.
5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
6. Depending on your adjusted gross income, the credit allows for up to 35 percent of your qualifying expenses.

How to File a Claim for the Child and Dependent Care Credit

In order to claim the Child and Dependent Care Credit, complete Form 2441, Child and Dependent Care Expenses along with your Form 1040 or Form 1040A, U.S. Individual Income Tax Return. Refer to Publication 503, Child and Dependent Care Expenses, for detailed information on the Child and Dependent Care Credit.

Need Help Filing for the Child and Dependent Care Credit?

At Verdeja, De Armas & Trujillo LLP, our team of Miami accountants is dedicated to providing personalized, financial guidance. We provide accurate and comprehensive financial statements as well as in-depth business analyses specific to your business or personal needs. Contact us today for a consultation!