Child Care Tax Credits
by: Metrodaycare.com Staff
Many people ask, "Do I qualify for a child care tax credit?"
Child care tax credits lower your taxes by deducting a percentage of the money spent on child care and thereby
lowering the amount of taxes you owe. This is different from a tax deduction. Tax
deductions only reduce the amount of taxable income, so tax credits are good!
Obviously, if you have visited our child
care expenses page or if you are currently paying for child care you know its expensive! The federal
government knows this, so child care tax credits are supposed to help with the financial burden of child
care. You can reduce your tax debt if you qualify for the child care tax credit. Do you want a bigger tax refund or owe less taxes, then you need to check if
you qualify for this tax relief!
What are the rules to receive child care tax credits?
- Your child must be less than 13 years old
- You have to be paying someone else to care for your child. This means if your spouse or another child
under the age of 19 is watching your child and you're paying them, this credit doesn't apply.
- Your child care provider can not be a dependent of yours.
- After school and latch-key programs are tricky. The portion after school does apply but regular
school expenses are not included.
- Finally the care must be provided for you to work or look for work.
- For those of use who pay for adult daycare expenses for a dependant 13 or older. You can also receive the
tax credit if that person in adult daycare is physically or mentally unable to care for themselves.
How much credit will I receive?
You'll receive between 20-35% of the child care costs as a tax credit. Your adjusted gross income determines
the percentage amount. A full chart of the percentage is below:
IF your adjusted gross income is: |
|
|
|
THEN the |
Over: |
- |
But not over: |
|
percentage is |
$0 |
- |
$15,000 |
|
35% |
$15,000 |
- |
$17,000 |
|
34% |
$17,000 |
- |
$19,000 |
|
33% |
$19,000 |
- |
$21,000 |
|
32% |
$21,000 |
- |
$23,000 |
|
31% |
$23,000 |
- |
$25,000 |
|
30% |
$25,000 |
- |
$27,000 |
|
29% |
$27,000 |
- |
$29,000 |
|
28% |
$29,000 |
- |
$31,000 |
|
27% |
$31,000 |
- |
$33,000 |
|
26% |
$33,000 |
- |
$35,000 |
|
25% |
$35,000 |
- |
$37,000 |
|
24% |
$37,000 |
- |
$39,000 |
|
23% |
$39,000 |
- |
$41,000 |
|
22% |
$41,000 |
- |
$43,000 |
|
21% |
$43,000 |
- |
No Limit |
|
20% |
As you can see from the above chart, the mininum credit percentage regardless of income is 20%.
Here's some helpful links for more info:
IRS pub 503 -- child care and dependant tax credits
Turbo Tax video on child care tax credit
Ten Things to Know About the Child and Dependent Care Credit
Everyone who qualifies for a child care tax credit should tax advantage of it!
Child Care Tax Credits 2011 |