Providing dependent care for your children can prove to be exceedingly financially burdensome for you. While expenses for child care seem to keep rising, it is important to explore other options to reduce costs. For this purpose, there is a government program known as the Dependent Care Tax Credit which provides you with certain child care financial benefits and is designed to help you reduce your taxes considerably while caring for a child.
What Is The Child And Dependent Care Tax Credit?
The federal government recognizes the immense expenditure incurred by you while caring for your children. In order to provide you with some sort of relief it has designed the Child and Dependent Care Tax Credit program. If you have been paying for daycare expenses, this program lets you claim a child tax credit of up to $3000 for one child and up to $6000 for two or more children. This child tax credit is given for up to 35% of the expenses incurred in childcare depending on your income. Thus, even without having to reduce your daycare expenditure, the dependent care tax credit provides you with a considerable amount of financial relief and is found to be a particularly useful child care resource for single parents.
Qualifying For And Claiming Child Tax Credit
Like most tax benefits, claiming child tax credit also requires individuals to possess some basic qualification factors. The dependent care tax credit is given to hard-working individuals who spend money regularly on daycares, nurseries and even daytime summer camps for their children.
- If you have a child under the age of 13 or a dependent of any age who is unable to care for themselves then you may be eligible to qualify for the child and dependent care tax credit.
- In claiming child tax credit, you must however be paying more than 50% of your household costs for your dependent.
- Furthermore, you must hire someone other than your dependent to care for your child. Your childcare provider needs to provide you with their name, address and social security number which you can fill out in the form while claiming the tax credit.
While the child tax credit qualification rules of the IRS are fairly transparent, it is essential that you abide by them in order to lawfully claim your dependent care tax credit.
How To Claim Your Child Tax Benefit Credit?
Claiming child tax benefit credit is fairly simple and may be highly beneficial to you and your family. If you are unsure of how to go about claiming child tax credit, it is advisable to consult a qualified tax professional or accountant to help you file your claim for dependent care tax credit.
- While filing for your tax returns, simply fill out Form 1040, 1040A or 1040NR, whichever is applicable.
- Full details regarding this child and dependent care tax credit claim can be found on the IRS government website under Publication 503 (1). It describes in detail everything you would need to know regarding the child and dependent care tax credit claims.
- It must be kept in mind that this child tax benefit credit does not benefit lower income families too much as child tax credit is not refundable. If you do not pay taxes or your taxes are lower than your claim you will not be reimbursed for the dependent care tax credit. It is advantageous for families with income over $24000 a year.
The Child and Dependent Care Tax Credit is a very favorable program designed by the federal government to assist working individuals in caring for their children. It not only helps save money but also helps parents provide quality child care for their children by using the child tax benefit credit.
(1) Publication 503: Internal Revenue Service