It’s a bit tough for parents who are responsible for childcare, and handling the cost of bringing up the child. It’s also tough for people who take care of persons with a disability. All these comes with a cost, and to help ease this financial burden, IRS allows you to enjoy a tax credit to cover for the expenses. You can claim the child and dependent care credit when filing your tax returns, and that can significantly lower your tax bill or even allow you to get a tax refund.
What is the child and dependent care credit?
This is a special tax credit for working parents or guardians who are taking care of their children or disabled dependents. The parent or guardian must have paid for childcare or care services for the disabled child or dependent the previous year. Also, an unemployed or full-time student may qualify for this tax credit if they paid someone to take care of the child or dependent with a disability in order to look for a job or attend school, respectively.
Why is this tax credit so important?
The cost of raising a child or supporting a dependent with disability can be very high. For that reason, if you qualify for this tax credit, the IRS will allow you to deduct child care expenses from your total tax bill. This will make sure you pay a lower tax or even get a good tax refund to cover the cost of child care or support for the disabled dependent. However, the amount of tax credit you can get depends on your income, the number of qualified dependents and the cost of care.
How much can you get?
As mentioned, the amount you can get depends on your income, among other factors. You can get at least 35% of all qualifying expenses which can get up to a maximum of $3,000 for one child or disabled dependent. If multiple dependents or children are involved, you should expect a maximum of up to $6,000. This is good money that can help ease your financial burden resulting from paying for childcare or support for a disabled dependent.
If you want to be eligible to claim the child and dependent care credit, you must have earned income. In addition to that, you must be a parent or the primary caregiver of the child or dependent claimed. Further, you must have paid for the care services in order to go to work or search for employment. Lastly, the child must be aged 13 years or under, and if you are claiming for an adult dependent, he or she must be disabled.
Some of the expense that qualify for the child and dependent care credit include babysitting costs, cost of care center(licensed), cost of home help like cook, cleaner, maid or housekeeper, and day and summer camp fees not including night camps.
When filing your tax returns you can claim the child and dependent care credit; if you qualify. The child care tax deduction or dependent care credit aims to ease your financial burden for paying the cost of childcare or support/care services for a disabled dependent, respectively.