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Income Tax Service
5200 W Market St
Greensboro, NC 27409
June 21, 2016
Keep in Mind the Child and Dependent Care Credit this Summer
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:
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
, Child and Dependent Care Expenses, provides complete details on all the
rules. Get it anytime on IRS.gov.
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.
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.
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
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.
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.
The credit is worth between 20 and 35 percent of your allowable expenses. The
percentage depends on your income.
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.
Certain Care Does Not Qualify.
You may not include the cost of certain types of care for the tax credit,
Overnight camps or summer school tutoring costs.
Care provided by your spouse or your child who is under age 19 at the end of
Care given by a person you can claim as your dependent.
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.
Dependent Care Benefits.
Special rules apply if you get dependent care benefits from your employer.
Additional IRS Resources:
If you have any question about eligible child or dependent care expenses, feel
free to contact your preparer's here at ElectroFile Income Tax Service.
Our best wishes for a great summer are extended to you and your family.