During the summer, many parents enroll their young children in summer day camps so that they can continue to work or look for a job. What they don’t realize is that they may qualify for a federal tax credit.
8 ways to find out if you qualify for the Child & Dependent Care Credit
- Your expenses are for the care of one or more dependent child(ren) under the age of 13.
- Your expenses are so that you can work or search for employment. If you file a joint tax return, this rule also applies to your spouse. The rule applies to your spouse during any month they are a full-time student or incapable of taking care of themselves.
- You have earned income from wages, salaries or tips including self-employment. Your spouse must also have earned income if you file a joint return. The rule applies to your spouse during any month they are a full-time student or incapable of taking care of themselves.
- You’re married and you filed a joint return. If you are legally separated or living apart from your spouse, you may still qualify for the credit.
- Daycare, home care and/or summer day camp qualifies for the credit. NOTE: This does not include overnight camps, summer school tutoring, care provided by a spouse, a child under age 19, or care given by a person you claim as a dependent.
- The credit is between 20% and 30% of your allowable expenses based on your income.
- The annual expense limit is $3,000 for one qualifying dependent or $6,000 for two or more.
- Employer dependent care may qualify. There are special rules to this benefit.
Keep thorough records of all of your receipts and annual tax records. You will need the contact information and taxpayer identification number of the care provider(s). This information will be reported on Form 2441, Child and Dependent Care Expenses.
The Child & Dependent Care Credit can be claimed throughout the year, not just as a summer credit. For more information on this IRS credit, click here.
To consult with a professional Liberty Tax ACA Advisor at your local Liberty Tax office, contact 800-673-8600 or visit HealthCareTaxInfo.com.