Your adorable children aren’t just loveable, funny and perfect…they are also a Tax Credit! The IRS recently published 5 facts about the Child and Dependent Care Tax Credit you should know:
1. Child, Dependent or Spouse. You may be able to claim the credit if you paid someone to care for your child, dependent or spouse last year.
2. Work-Related Expense. The care must have been necessary so you could work or look for work. If you are married, the care must have been necessary so your spouse could work or look for work. This rule does not apply if your spouse was disabled or a full-time student.
3. Qualifying Person. The care must have been for “qualifying persons.” A qualifying person can be you child under age 13. A qualifying person can also be your spouse or dependent who lived with you for more than half the year and is physically or mentally incapable of self-care.
4. Earned Income. You must have earned income for the year, such as wages from a job. If you are married and file a joint return, your spouse must also have earned income. Special rules apply to a spouse who is disabled or a student.
5. Credit Percentage / Expense Limits. The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on the amount of your income. Your allowable expenses are limited to $3000 if you paid for the care of one qualifying person. The limit is $6000 if you paid for the care of two or more.
Navigating taxes can be a stressful experience, but the team at Gold Standard is readily available to help you file your return and reduce your tax liability!
