For many working parents, paying for childcare is simply a fact of life. But a portion of those expenses could actually qualify for a federal tax credit and lower your taxes. Here is everything you need to know in order to claim the Child and Dependent Care Tax Credit.
How old can my children be to be eligible?
You can claim the credit for any and all children under the age of 13.
Can I get the credit if I am a single parent?
Yes, single filers can claim the Child and Dependent Care Credit. If you are married, you have to file a joint return to take the credit. You won’t be eligible if you are married and filing separately.
Can I get a tax credit for daycare if I am a stay-at-home parent?
To qualify for the credit, you and your spouse (if you are married) have to be working, looking for work or enrolled in school full time.
What is the minimum income required to get the child care credit?
The IRS says that you must have earned income for the year, but there is no minimum required. Income can include wages, salaries, tips, and net earnings if you are self-employed.
What type of child care expenses can I claim?
The type of paid care that qualifies for the credit includes day camp, daycare, or in-home care provided by a babysitter. But overnight camp, tutoring, or child care provided by someone you claim as a dependent (an older sibling, for example) do not count toward the credit.
How much is the Child and Dependent Care Credit worth?
The amount of tax credit you receive is anywhere from 20 – 35% of your childcare expenses. The percent will depend on your AGI. If you have one child, you can calculate the credit for up to $3,000 of allowable expenses. If you have two or more children, the credit can be based on up to $6,000.
What do I need to get my child care tax credit?
You’ll have to report the name, address, and SSN or EIN of the care provider on your return, so be sure to keep good records and hang on to your receipts.
Read also: 7 Ways Children Can Reduce Tax Liability