Not many people associate positive things with the word “tax.” Fortunately, the word “credit” is another matter. You need to consider every tax credit possible in order to get the most savings on your return. While you probably will only qualify for a handful, it’s still important to check the details on some of the more popular tax credits.
For example, there’s a chance your family has qualified for the Child and Dependent Care Credit over the summer months. If so, it will probably be easier to gather up those details that you’ll need for your tax return now. Otherwise, you’ll need to put it on your to-do list for next year. And by then, you’ll probably already be bogged down with plenty of other tasks.
Who Can Take the Child and Dependent Care Tax Credit?
To better understand where you’ll stand with this tax credit, just run through this list of qualifications. The following details can help confirm whether you need to pay attention to getting this section filled out on your tax return:
· Do you need to support a dependent with wages you’ve earned?
· Does your dependent require care while you’re at work, or looking for work?
· Do you financially support your dependent’s need for a home?
· Is that dependent under age 13?
· OR – is the dependent your spouse or another individual who is otherwise unable to care for themselves?
· ALSO – if the dependent is your spouse, are both of you are either actively working or looking for work?
This tax credit can be a little confusing, but hopefully those qualifying features helped give you a better idea about how it works. If you do qualify, there is a specific deductible rate that you’ll be able to use as a credit. But in order to secure those savings, you’ll need to provide the right information to the IRS.
The Information You Need to Save for Your Taxes
If you’re interested in exploring the Child and Dependent Care Credit, these items will often come into play:
· Receipts for the daycare / day camp expenses – NOT overnight camps or tutoring
· Total costs for any in-home daycare or sitters – ONLY IF that person isn’t another one of your dependents, your spouse, or anyone under the age of 19
· Housekeeping expenses for the general care and safety of other qualifying dependents
Gathering this information while it’s still fresh on you mind is a great way to get ahead of the game for your personal tax preparation. And as always, NSO and Company is here to help move you right along! It always helps to have an experience tax company on your side because your unique circumstances might not be entirely clear with how this tax credit works and can change over time.
If you have questions about the Child and Dependent Care Credit, please don’t hesitate to give our office a call at (317) 588-3131. The tax code undergoes many changes, and our team would be happy to help you review the latest information to make sure you’re on track to get as many deductions as possible!