• About Fremont Kids Academy
    • Testimonials
    • Our Staff
    • Menu
    • Curriculum
    • Needs and Wants
    • Provider Referrals
    • Community Directory
  • Blog
  • Enrollment & Location
  • Fees & Hours
  • Webcam
  Fremont Kid's Academy - Safe Childcare with Secure Webcams
Fremont Kids Academy is now accepting Spring 2022 Preschool Program applications

Child Care Tax Credit

4/2/2013

2 Comments

 
Don't Forget to Do Your Taxes - and Save - with the Child Care Tax Credit

http://www.kiplinger.com/article/taxes/T054-C001-S001-faqs-on-the-child-care-tax-credit.html


Visit the link above for more information, and as always seek professional guidance with your taxes. Below is an excerpt from the article that may help guide you with saving the most money.
-Dana Wilson

"What expenses qualify for the child-care tax credit, and who qualifies?

You can claim this credit if you spend money for the care of children younger than 13 so that you can work or look for work. You must have earned income (that's earnings from a job, not investments) to qualify for the credit, and if you’re married, both you and your spouse must have a job or be a full-time student.

The cost of day care, preschool, before- and after-school care, day camp, or a nanny or other babysitter can count toward the credit.

How much is the credit worth?

That depends on the number of children, the cost of care, and your income. You can count up to $3,000 in child-care expenses for one child, or up to $6,000 for two or more children. The credit is a percentage of the amount spent on child care, and that percentage gradually decreases as income increases. Families that earn less than $15,000 can claim a credit for 35% of qualifying expenses; families that earn more than $43,000 get the smallest credit: 20% on eligible costs.

Is there a maximum income limit?

No. Regardless of your income, you can benefit from the credit. Keep in mind that this is a credit, not a deduction, so it lowers your tax bill dollar for dollar.


Does the cost of kindergarten count toward the credit?

No. The cost of kindergarten and higher grades is considered to be an educational expense, not a child-care expense, so it doesn't qualify for the child-care credit. However, any before- or after-school care -- whether it's through the school, another organization or a nanny or babysitter -- can count toward the credit until the child turns 13.

If your child has not yet reached kindergarten, the cost of his or her program can count toward the credit -- whether it’s called preschool, pre-kindergarten, nursery school or day care.

Are there other expenses that count?

Fees paid to a nanny agency or a deposit for a preschool program can count toward the credit if it's required to receive the care (if you forfeited the deposit and didn't use the program, however, the deposit is not eligible). Transportation costs can count toward the credit if the caregiver, as part of the care, takes your child somewhere and bills you for the cost of travel.

What forms are needed to claim the credit?

To claim the credit, file Form 2441 with your federal tax return. You’ll have to report the care provider’s employer-identification number or Social Security number. For more information, see IRS Publication 503 Child and Dependent Care Expenses and the instructions for Form 2441.

Is it better to take the dependent-care credit or pay for care with money funneled through a flexible-spending account at work?

If your employer offers a flexible-spending account for dependent-care expenses, then that’s usually more valuable. The money set aside in the FSA is subtracted from your paycheck before income taxes are calculated, and it also avoids the 7.65% Social Security and Medicare tax. So if you're in the 15% income-tax bracket, you won't have to pay the 15% federal tax or the 7.65% Social Security tax, which means that you'll avoid paying a total of 22.65% in taxes on that money. In that case, contributing the maximum $5,000 to your dependent-care flex plan cuts your tax bill by $1,133. The benefits of the FSA get even better as your tax bracket rises. (And, in most states, avoiding state income taxes is frosting on the cake.) See Flexible Spending Account vs. Dependent-Care Credit for more information.

If you have two or more children and child-care expenses exceeding $5,000, however, you might be able to benefit from both the FSA and the dependent-care credit. You can set aside up to $5,000 in pretax money in your FSA and claim the dependent-care credit for up to $1,000 in additional expenses."


Read more at http://www.kiplinger.com/article/taxes/T054-C001-S001-faqs-on-the-child-care-tax-credit.html#ucvhzDEXx0iFqlbP.99 

2 Comments
accounting services plantation link
10/4/2013 04:05:23 pm

blog is absolutely fantastic! actually added your blog to my favorites and will look forward for something new.

Reply
kids cakes link
6/13/2014 08:21:01 pm

nice posts

Reply



Leave a Reply.

    Picture

    Projects

    Parents interact with staff about student's Projects.

    Archives

    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    December 2021
    November 2021
    March 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    October 2013
    September 2013
    August 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    March 2011

    Categories

    All
    Activities
    Color Week
    Education
    Quality Child Care
    Quality Child Care

    RSS Feed

Powered by Create your own unique website with customizable templates.
Photo used under Creative Commons from Joe Shlabotnik