Can I claim the Child and Dependent Care Credit? This is a question many individuals may ask their CPA or their tax attorney. The article below has been drafted by a tax attorney at The McGuire Law Firm to outline a few issues regarding the Child and Dependent Care Credit.
If you paid for care to be given to your child, dependent or spouse last year you may be eligible for the Child and Dependent Care Credit.
The money you paid for the care received must have been necessary for you to work or look for work/employment. This applies to your spouse if are married and filing your 1040 Individual Income tax return as married filing joint.
The care must have been provided to a qualifying person. A qualifying person can be your child under the age of 13. The qualifying person can also be a spouse or dependent who is physically or mentally incapable of taking care of themselves. The qualifying person must also have lived with you for more than half of the year.
You and your spouse (if married filing jointly) must have earned income such as wages from a job. There are also special rules that apply if a spouse is a student or is disable.
You cannot claim care payments that were made for the care of a qualified person but paid to your spouse, the parent of a qualifying person or to an individual that you can claim as a dependent on your 1040 tax return.
The credit can be up to 35% of the costs for qualifying care depending upon your income. The limit is $3,000 of your total costs for the care of one qualifying person. If you have paid for the care of two or more qualifying persons, you can claim up to $6,000 of your qualifying costs.
If your employer has provided dependent care benefits, special rules may apply. Please see IRS Form 2441 regarding Child and Dependent Care Expenses.
On the tax return or forms you must state the social security number of each qualifying person to claim the credit. Further, you must state the name, address and number of the care provide to claim the credit. Generally, the number of the care provided will be their social security number or their Employer Identification Number (EIN).
When claiming the credit, attach Form 2441 to your 1040 Individual Income tax return when filed with the Internal Revenue Service.
You can discuss this credit and other tax credits with a Denver tax attorney at The McGuire Law Firm. A tax attorney can assist you with your tax questions and issues.
Contact The McGuire Law Firm to schedule a free consultation with a Denver tax attorney!