Description

Kevin McCormally explains five things you need to know about child-care tax credit.

Transcript

If you pay someone for childcare so you can work you can be entitle to a big tax free, the child- care tax credit. That’s 6.5 million tax payers claim to credit and save themselves nearly 3.5 billion dollars according to the latest diary statistic. That’s billion with the B, I’m Kevin McCormally of Kiplinger’s with five things you must know about the child-care tax credit. 1. You Must Work. This credit is the Government sway of helping the course of caring for your children while you are at work making money for the IRS to tax. Now if you married both you and your spouse must have earnings from the job or self-employment and there is one of you is a full time student. 2. Children Must Be under Age 13. The credit applies only to expense you should pay for your child under age 13. If your child’s celebrates of 13th birthday during the year though care expenses paid up until that time count for the credit. 3. Credit could save you up to $2,100. The ranges are on 20% to 35% of qualified expenses depending on year income. The higher income the lower the percentage the credit also applies up to $3000 expenses for the care of one child or up to $6000 for the care of two or more. That means the maximum credit for one child is between $600 and $1050 and for two or more children the top credit range is from $1200 all the way to 2100. Remember a tax credit cut your tax bill or increase as you refund dollar for dollar. 4. Number, Numbers, Numbers If your care-givers is individual you will need his or her for security number if you use a date care center no need it’s EIN or Employer Identification Number. And you will need to report those security numbers of each of the children for home care is provided. Any of this numbers and your credit will be held up or the IRS asks you for them. 5. Child-Care Flex Plans If you pay your childcare bills with money from a tax free flex spending plan at work. You can’t claim the child-care credit on those same expenses that would be double defect but you still have to fill out the child care credit tax form to let the IRS know that the flex plan money is tax free. And get this; you may deserve the childcare credit even if you max out on the plan at work. For not more than $5000 can be final to a flex plan for childcare, the credit can be claim against up to $6000 of care cost you might deserve the correct on that extra thousand box. I’m Kevin McCormally and those are the basics.