Posted by : Daniel Stoica in (Articles, Tax Credit, Tax Deductions, Tax Tips, Tax Topic) On: June 29th, 2011
The U.S. government knows that when you are financially responsible for a child or other dependent, you may come into financial difficulties, so the IRS allows you to take a tax credit on your income taxes. It will reduce your tax debt if you qualify for the Child Tax Credit.
If you pay someone to care for your child or other dependent while you work, or look for work, you may qualify for this tax credit. The good news is, by claiming this credit, you may even qualify for a bigger tax refund.
What is the child tax credit?
The child tax credit is a tax credit that depends on the number of dependent children in your family. The credit depends on your income level as well.
How do I qualify for this tax credit?
To qualify for this credit, your child or dependent must be under the age of 13. You must also pay someone to care for them while you are working or looking for work, but it must not be a spouse or your own child under the age of 19 years old. This caregive must not be your own dependent. An after school program, such as Boys and Girls Club or YMCA may qualify, but you may not claim regular school expenses.
If you care for your spouse, or any dependent who can’t care for themselves, age is not important in this instance. If you care for a disabled parent or mentally or physically challenged child, they qualify for the tax credit if they lived with you for more than six months out of the year. You are allowed to claim as much as 35% of the expenses you incur to care for them, which is $3,000 for one person or $6,000 for two or more people.
If you are employed and file as single, head of household or married filing jointly, you may apply for the child tax credit. If you receive benefits for child care through your employer, these amounts will be calculated on your return.
Why wouldn’t I apply for this credit?
If you qualify for the child tax credit, there is no reason why you shouldn’t claim it. Take advantage of all of the credits and deductions you can. It will reduce your tax burden or give you a bigger refund come tax time and, frankly, with all of the work you do caring for your child or parent or other dependent, you deserve the tax break.