Most of us are familiar with tax credits for childcare expenses, but did you know that summer day camps typically qualify if you send your child while you work. Here are a few things the IRS wants you to know about the Child and Dependent Care Credit before next year’s filing:
Typically, your dependent children under age 13 will qualify, but other dependents such as an elderly parent may qualify as well. Take the “Qualifying Person Test” to find out who else may be included.
What expenses are covered?
Your expenses for care must be work-related to qualify for this credit, meaning you have to pay for care in order to work. If you file a joint return, the rule also applies to your spouse during any month they are a full-time student. They also meet it if they’re physically or mentally incapable of self-care.
What kind of care qualifies?
At-home care, daycare facilities and day camps.
What is the amount of the credit?
The credit is worth between 20 and 35 percent of your allowable expenses; the percentage is based on the amount of your income.
Is there a limit?
Yes, the limit is $3,000 for one qualifying person or $6,000 for two or more.
Keep in mind, some care will not qualify, 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.
Be sure to keep records and receipts. When filing your tax return, you’ll need the name, address and taxpayer identification number of the provider for Form 2441, Child and Dependent Care Expenses.
CWA planning teams are well-equipped to help you identify any child or dependent care tax credits for which you may qualify. Contact them with any questions, or visit IRS.gov for full details and tests to claim the credit.
Remember that this is not only a summer tax benefit. You may eligible to claim care that you pay for any time during the year.