Wednesday, June 11, 2014

IRS Special Edition Tax Tip 2014-16: Get Credit for Child and Dependent Care This Summer

IRS Special Edition Tax Tip 2014-16: Get Credit for Child and Dependent Care This Summer

Announcement from the I.R.S. June 11, 2014 (link above)

Now that the kiddos are out of school, there is that little relief that you no longer have to wait in long lines to drop the children off, but they will probably need oversight while you or your spouse work, or look for work.

 Having to pay day care during the off-school months can hit an already tight budget hard. It will be a big help to at least receive tax credits for amounts paid during the 2014 tax year.

Summer daycare for dependents, which counts children under 13 years old, and any other Qualifying Dependent, who is your dependent or would be your dependent. 
  • Perhaps your elderly father lives with you. You house him over 6 months of the year, you help him buy and attain medicine, take him to the doctor, help him with hygiene, etc. He would qualify as your dependent, except he receives gross income of more than $3,900.00; not enough to survive on, but too much to be rated as a dependent. If you have to take him to daycare, or hire someone to come to your home to watch him, those payments may be eligible for the Child & Dependent Care Credit.

Summer Day Camps and Tax Credits by
Example 1: Say you have a 5 year old son, and a 16 year old son. You decide to pay your son to watch his younger brother during the summer, while you work, and your deadbeat husband "looks for work." This may be the best arrangement you can afford, but you would not be able to claim the Child & Dependent Care for those payments.

Example 2: Your deadbeat husband finally got run over by a reindeer, and lived, but he is just a vegetable. You have two dependent children, ages 4 and 7. Your payments made to a Qualifying Provider (who must give a SSN/or an EIN) for care while you work are probably eligible for the credit, because your Spouse is incapable of caring for the children.

Example 3: In order to take up the slack of having to pay for Child Care all summer, you enroll them in camp for two weeks solid, thinking that you can deduct the cost of the "Over Night" Camp as Child and/or Dependent Care. You would not be eligible for the credit in this case. Child & Dependent Care Expenses - YouTube
If you are counting on the Child and Dependent Care Credit for your 2014 taxes, make sure to follow all of the rules. Keep good records, and reciepts for all monies paid out. 

Good Luck, Happy Summer, and don't forget to sign up for Summer Reading Programs -2014.