If you are a working parent or look
for work this summer, you may need to pay for the care of your child or
children. These expenses may qualify for a tax credit that can reduce your
federal income taxes. The Child and Dependent Care Tax Credit is available not
only while school’s out for summer, but also throughout the year. Here are
eight key points the IRS wants you to know about this credit.
1. You must pay for care so you
– and your spouse if filing jointly – can work or actively look for work. Your
spouse meets this test during any month they are full-time student, or
physically or mentally incapable of self-care.
2. You must have earned income.
Earned income includes earnings such as wages and self-employment. If you are
married filing jointly, your spouse must also have earned income. There is an
exception to this rule for a spouse who is full-time student or who is
physically or mentally incapable of self-care.
3. You must pay for the care of
one or more qualifying persons. Qualifying children under age 13 who you claim
as a dependent meet this test. Your spouse or dependent who lived with you for
more than half the year may meet this test if they are physically or mentally
incapable of self-care.
4. You may qualify for the
credit whether you pay for care at home, at a daycare facility outside the home
or at a day camp. If you pay for care in your home, you may be a household
employer. For more information, see Publication 926, Household Employer's Tax
Guide.
5. The credit is a percentage
of the qualified expenses you pay for the care of a qualifying person. It can
be up to 35 percent of your expenses, depending on your income.
6. You may use up to $3,000 of
the unreimbursed expenses you pay in a year for one qualifying person or $6,000
for two or more qualifying person.
7. Expenses for overnight camps
or summer school tutoring do not qualify. You cannot include the cost of care
provided by your spouse or a person you can claim as your dependent. If you get
dependent care benefits from your employer, special rules apply.
8. Keep your receipts and
records to use when you file your 2013 tax return next year. Make sure to note
the name, address and Social Security number or employer identification number
of the care provider. You must report this information when you claim the
credit on your return.
For more details about the rules to
claim this credit, see Publication 503, Child and Dependent Care Expenses. You
can get both publications at IRS.gov or have them mailed by calling
800-TAX-FORM (800-829-3676).
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication
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