Deducting childcare expenses
Did you know that if you have a child or children 12 years old or younger and pay for daycare while you work or while you are looking for work, you may be eligible for a childcare tax credit? This credit is called the child and dependent credit.
What is the purpose of the child and dependent care credit?
The purpose of the child and dependent care credit is to assist working single moms, couples, and guardians with some of the expenses involved in raising a child or caring for a disabled dependent. The amount of the credit will vary depending on your earned income, expenses paid to provide child care services so that you can work. The credit reduces the amount of income taxes due, which can, in turn, maximize your refund.
Qualifications for the child and dependent care credit
What is the criteria to qualify for the child and dependent care credit? You must meet all of the following:
- You must have earned income for the tax year you are filing.
- You must be the parent or main caretaker of the child or children.
- The child or children’s childcare must have been used so that you could work or look for employment.
- You file your taxes using status single, head of household, qualifying widow or widower with a qualifying child.
- Your child or children must be under 13 or must be disabled and physically or mentally incapable of caring for themselves.
- The childcare provider cannot be your dependent or the child’s parent.
Depending on what your income is, the childcare credit can be up to 35 percent of what you spent on care. Any child care contributions or reimbursements from employers or others must be deducted from the total expense.
Although many single moms have similar situations, every family is different. The IRS has a series of exceptions to the rules in the qualification process.
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