Day camps are common during the summer months. Many parents enroll their
children in a day camp or pay for day care so they can work or look for work.
If this applies to you, your costs may qualify for a federal tax credit. Here
are 10 things to know about the Child and Dependent Care Credit:
1. Care for Qualifying Persons. Your expenses
must be for the care of one or more qualifying persons. Your dependent child or
children under age 13 generally qualify.
2. Work-related Expenses. Your expenses for care must
be work-related. In other words, you must pay for the care so you can work or
look for work. This rule also applies to your spouse if you file a joint
return. Your spouse meets this rule during any month they are a full-time
student. They also meet it if they are physically or mentally incapable of self-care.
3. Earned Income Required. You must have earned
income. Earned income includes wages, salaries and tips. It also includes net
earnings from self-employment. Your spouse must also have earned income if you
file jointly. Your spouse is treated as having earned income for any month that
they are a full-time student or incapable of self-care.
4. Joint Return if Married. Generally, married couples
must file a joint return. You can still take the credit, however, if you are
legally separated or living apart from your spouse.
5. Type of Care. You may qualify for the credit
whether you pay for care at home, at a daycare facility or at a day camp.
6. Credit Amount. The credit is worth between 20 and
35 percent of your allowable expenses. The percentage depends on your income.
7. Expense Limits. The total expense that you can use
in a year is limited. The limit is $3,000 for one qualifying person or $6,000
for two or more.
8. Certain Care Does Not Qualify. You may not include
the cost of certain types of care for the tax credit, including:
- Overnight camps or summer school tutoring costs.
- Care provided by your spouse or your child who is under age 19 at the end of the year.
- Care given by a person you can claim as your dependent.
9. Keep Records and Receipts. Keep all your receipts
and records for when you file taxes next year. You will need the name, address
and taxpayer identification number of the care provider. You must report this
information when you claim the credit on Form
2441, Child and Dependent Care Expenses.
10. Dependent Care Benefits. Special rules apply if
you get dependent care benefits from your employer.
Keep in mind this credit is not just a summer tax benefit. You may be able
to claim it at any time during the year for qualifying care. IRS Publication
503, Child and Dependent Care Expenses, provides complete details on all
the rules. Get it anytime on IRS.gov.
Additional IRS Resources:
- Tax Topic 602 - Child and Dependent Care Credit
- Frequently Asked Questions - Child Care Credit
- Publication 926, Household Employer's Tax Guide
- Publication 907, Tax Highlights for Persons With Disabilities
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