It’s summer. It’s hot. The weather is great and the kids are home from school. Many parents pay for childcare or day camps during the summer while they work. If this describes your family, your costs may qualify for a federal tax credit. To qualify, your expenses must be for the care of one or more qualifying persons. Typically, this is your dependent child or children under the age of 13. Your expenses must also be work related. This means that you must pay for the care so that you can work, or look for work. This also applies to your spouse if you file a joint return or if you are a full-time student or your spouse is incapable of self-care. If you have any questions be sure to contact your Kansas City tax attorney.
You must have earned income, wages, salaries, or tips. This includes your net income if you are self-employed. Again, this also applies to your spouse if you file jointly. You may qualify for this credit whether you pay for care at home, in a daycare facility, or at a day camp. Your credit can be as much as 35% of your expenses and the total amount of expenses is limited to $3000 for a single child or $6000 dollars for two or more children. Talk to your tax attorney if you are uncertain what kinds of income qualify for the tax credit.
Overnight camp or summer school tutoring does not qualify and you cannot include the cost of care provided by your immediate family members or individuals you are claiming as a dependent. Special rules will apply if you get dependent care benefits from your employer. As always, keep all your receipts and records. Be sure to note the name, address, and social security number or ID number of the care provider. You must report this information when you claim the credit on your tax return. Keep in mind that this credit does not apply just to your summer activities but all year long. To learn more about our services, call 913-735-4829 to speak to a tax attorney.