Child and Dependent Care Credit – All You Need to KnowMay 7, 2023
When you have a child or dependent you are taking care of, the most difficult thing is paying for their dependent care. This is a difficult financial burden, but the good news is that you can enjoy some tax relief through child and dependent care credit. This credit allows you to enjoy some relief when paying your annual taxes. Can anybody claim this credit? What are the requirements? To learn these and more, continue reading.
First, what is a child and dependent care credit?
This is a tax break specifically for working persons who have children or dependent persons, and pay for their dependent care. As a result, the government offers a relief to help offset the cost associated with taking care of dependent with disability or child. The child care credit when approved will be deducted from your total taxes. As a result, if you meet the requirements for getting this tax credit, your tax liabilities can be reduced significantly by hundreds or thousands of dollars.
For you to get this credit, you must have a job. Remember the credit is deducted from your tax liabilities you need to pay the government. In addition, you must have a dependent with disability or child under the age of 13, and you must be paying for their dependent care and other care services. Also, you must have stayed with the child or dependent for more than half a year in your home. Another requirement is that the dependent with disability is not able to pay for their care or even take care of themselves at all.
If I have a higher income, can I claim child care credit?
This is one of the many questions asked by many people earning higher incomes. The good thing about child and dependent care credit is that it is for all those persons working; either earning high or low income, and are paying for dependent care for children or dependent persons with disability. However, the tax credit is much smaller at higher incomes. But all in all, it can help ease your financial burdens when paying your tax liabilities.
How much tax break can I get through child and dependent care credit?
It’s a bit hard to calculate how much tax break you can get through child and dependent care credit. But it’s based on how much you spend on dependent or child care, and your income, of course. If you have one child or dependent, you need to add up total expenses of your care that qualify for this credit. The maximum amount you can claim is $3000 for one dependent, or up to $6000 for two or more persons.
Paying for dependent care for a child or disabled persons is quite expensive. But, you can enjoy a tax break if you are working by claiming the child and dependent care credit. This credit is deducted from your total taxes liabilities. As a result, your total taxes can be reduced by hundreds or even thousands of dollars, easing your financial burden. Use H&R Block online tax filing when claiming child and dependent care credit.