If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return if you paid someone to care for your child, your spouse or your dependent this past year. If you qualify, you can claim up to 35% of your gross adjusted income, taking up to $3,000 for one qualiftying individual and up to $6,000 for two.
Note that you must reduce your claim by the amount of any dependent care benefits (provided by an employer) that you deduct from your income.
Also, if you pay someone to come into your home and provide care, you may be a "houehold employer". As such, you'll be required to withold and pay social security and medicare tax as well as federal unemployment tax.
Claiming a credit for child and dependent care is - like most of the IRS tax code - complex. Have a look through the points below, and call us if you need any help with your child and dependent care claims.
- You can claim a credit for one or more qualifying persons. Qualifying persons are your dependent children under age 12 at the time the care was provided, or your spouse (and certain other individuals) when he or she is physically or mentally incapable of caring for themselves. Of course, you will be required to identify each qualifying person on your tax return. Qualifying persons must have lived with you more than half of the year.
- The care must have been provided so that you (and/or your spouse - if you are married and filing jointly) could either work or look for work during the time care was provided.
- To qualify, you must have earned income from wages, salaries, tips or other taxable employee compensation or net earnings from self-employment. If married, you or your spouse (but not both) may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.
- Payments for care cannot have been paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year - even if he or she is not your dependent. You must identify the care provider(s) on your tax return.
- Also, to qualify your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents. See the IRS Publication 503, Child and Dependent Care Expenses for complete details.
