What is It:
The Child and Dependent Care Credit is designed to provide tax relief to parents who have to pay for the care of a child or qualifying person while they are working or searching for work.
Who Qualifies:
Anyone who paid for the care of a child, spouse, or dependent could be eligible to take the Child and Dependent Care credit.
Amount of Credit:
Up to $3,000 for one qualifying person; Up to $6,000 for two or more qualifying persons
Criteria to Qualify:
- The child receiving care must be your dependent and 12 years of age or younger. Additionally, a spouse or other dependent who is mentally incapable of self-care could qualify. All qualifying persons should be identified on your tax return.
- The care has to be provided so you and your spouse (if filing jointly) can work or search for work.
- You have to have earned income.
- Payments for care should not be your spouse, the parent of your qualifying person, or anyone you can claim as a dependent. You have to identify your provider on your tax return.
- You must file single, joint, head of house, or widow(er). You also, have to have a dependent on your return.
- Your qualifying person must have lived under your roof for 1/2 the year at a minimum. Special exclusions could pertain to death and qualifying persons of parents divorced during the year.
- You can use the credit for up to 35% of your qualified expenses.
- In 2010, the maximum credit is $3,000 for one qualified person. Up to $6,000 for 2 or more qualified persons.
- The qualified expenses must be netted from any reimbursements received.
- If someone comes to your home to provide care, you could be considered an employer and other tax implications could imply.
