You may be eligible for a tax credit as a result of the expenses you incur each year for child care.
Generally, eligible costs include the amount paid for care provided for a Dependent who is Under Age 13 or for a spouse or dependent who is unable to care for himself or herself. The credit is anywhere from 20 to 35 percent of your expenses (up to a limited amount), depending on your adjusted gross income for the year.
Generally, to be eligible for the credit, the following requirements must be met:
(3) The reason for incurring the child and dependent care expenses is so you (and your spouse if filing jointly) can work or look for work.
(4) You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. You cannot make payments to your spouse, or the parent of your qualifying person if your qualifying person is your child and under age 13 (e.g., an ex-spouse).
(5) Your filing status must be single, head of household, qualifying widow(er) with dependent child, or married filing jointly. Generally, you must file a joint return if you are married.
(6) The care provider must be identified on your tax return.
(7) If you exclude or deduct Dependent Care Benefits provided by a Dependent Care Benefit Plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses. Generally, this amount is $3,000 if one qualifying person was cared for, or $6,000 if two or more qualifying persons were cared for. If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000.
While child care benefit payments from an Employer Benefit Plan may be excludible from income, other child care expenses are used to calculate a tax credit on your return. Please call me at your earliest convenience so we can discuss your individual situation and how to best maximize the tax benefits allowable.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 05292021-1 320-589)