IF you paid someone to care for your child, spouse, or dependent, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Here are 10 tips on claiming a credit for child and dependent care expenses.
• The expense for child and dependent care must be provided for your dependent child age 13 or younger when the care was provided. Expenses for your spouse and certain other individuals who are physically or mentally incapable of self-care may also qualify.
• The qualifying person must live with you for more than half of the year. There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents.
•bThe credit can be up to 35 percent (was 30 percent) of your qualifying expenses, depending upon your adjusted gross income.
• You may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit. These amounts were made permanent by ATRA 2012.
• The care must be provided so you or your spouse can work (or look for work).
• You or your spouse must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. You may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.
• Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
• The payments for care cannot be 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.
• The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.
• If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer and may have to withhold and pay Social Security and Medicare tax and pay federal unemployment tax. For more information on the Child and Dependent Care Credit, see Publication 503, Child and Dependent Care Expenses!
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Sy Al-os Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies. The firm celebrates its 38th anniversary in 2015.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in 704 Mira Monte Place, Pasadena, CA 91101. He has 50 years of experience in accounting, consulting, and tax work.
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The Firm proudly welcomes Arlene Al-os in 2015. She obtained her bachelors of Science in Accountancy from Mindanao State University and MBA from Ateneo de Manila University. She teaches intermediate accounting at UCLA and was a professor of Economics at Asia Pacific College. She has over 15 years of experience including member firms of KPMG and BDO Seidman accounting firms.
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Our readers may call (626) 744-0200 or email tax questions to [email protected]. Please visit our website for about 300 tax tips at www.victorsycpa.com.
