Posted by : Daniel Stoica in (Articles, Tax Credit) On: July 8th, 2011
Tagged Under : 2441 Form, accounting professional, Child and Dependent Care Expenses, child care, credit, Daniel Stoica, day camp, dependent, employer, expenses, Household Employer's Tax Guide, income, Internal Revenue Service, IRS, Publication 926, self-employment, spouse, summer, Tax, tax professional, Wages
Most working parents still have to work during the summer, even when their children are out of school. Because of this, there are extra expenses for child care if you have a child 13 years of age or younger. These expenses add up, but there is now a tax credit for parents who send their children to summer day camp.
The Internal Revenue Service recently announced that expenses for summer day camp for your child could give you tax credits on your federal tax return.
Dianne Besunder, media relations spokesperson for the IRS said, “If you pay someone to care for your child, spouse, or dependent, you can claim the Child and Dependent Care Credit on your federal income tax return.”
People who are working, or looking for work, need to have child care while they do so. Day care and summer day camp qualify for this tax credit, which can be up to 35% of your expenses, depending on your income.
There are 9 qualifying factors that allow you to claim the Child and Dependent Care Credit.
- Care must have been given to at least one qualifying person. This would be your dependent child who is 13 years old or younger, a spouse and anyone else who is physically or mentally disabled whom you care for. You must list each person on your tax return.
- Care must be given so you, or your spouse, can work, or look for work.
- You, or your spouse, must have earned income from wages, salary, tips, or earnings from self-employment. If you, or your spouse, were a full-time student, or care for a disabled person, you may qualify as having earned income.
- You may not pay your spouse or other dependent, for the care. Your child may not be 19 years old or older at the end of the year, even if they are not your dependent. The care-giver must be identified on your tax return.
- You must file as single, married filing jointly, head of household, or qualifying widow(er) with a dependent child.
- The qualifying person must have lived with you for at least six months out of the year. The only exceptions are birth or death of the qualifying person, or if the child is of separated or divorced parents.
- For the 2011 tax year, you are allowed up to $3000 of your expenses for the year for one dependent and $6000 for two or more dependents.
- The expenses must be reduced by the amount of dependent care benefits that are provided by your employer which are deducted or left out of your income.
- If you pay someone to care for your dependent in your home, you may have to withhold social security and Medicare tax, and also pay federal unemployment tax. Publication 926, Household Employer’s Tax Guide, explains this in detail.
Use the 2441 Form, Child and Dependent Care Expenses, to figure you credits, and send it in with your tax return.