Child and Dependent Care Expense

In these modern times a dual income family is the norm.  When a dual income family also has children, it’s necessary to get some kind of care for those children so both parents can work full time.  Often times that care costs money.  The United States tax system recognizes the hardships placed on dual income families with children and provides a measure of economic relief by granting a tax credit for child and dependent care expenses.

To qualify for the credit for child and dependent care expenses you must meet the following tests:

1. The care must be for a child under 13 or someone who would be a dependent and is unable to take care of him or herself.
2. You have to have earned income during the year.
3. The child and dependent care expenses must have been paid so you can work.
4. The person you pay for the care must be someone who is not claimed as a dependent on your tax return.
5. Your tax filing status must be single, head of household, or qualified widow/widower with a dependent child. Generally, if you are married, you must file a joint return.
6. You must complete a specific form on your 1040 tax return and identify the caregiver on that form.
7. There are certain dollar limits that apply.

Also note, if you or your spouse received any dependent care expense reimbursements from your employer, you may be entitled to exclude them from your taxable income.

If you pay expenses to care for children or other dependents who are incapable of caring for themselves and want to assess your tax options with regard to these expenses, then schedule your free consultation by calling (480) 888-7111 or submit a web request here.