The child and dependent care credit is a tax deduction that allows some people to write off up to 35 percent of child care costs on your taxes! Keep reading to learn more about the child care tax credit, what you have to do to qualify for it, and where to make the deduction on your tax forms.

Tax Season Will Be Here Before You Know it

Thanksgiving is behind us and winter break is looming. This time of year, many people in the Chicago area are making their holiday lists and checking them twice! There’s lots of shopping for food and presents ahead. However, if you’re one of those who got all their shopping out of the way on Black Friday and Cyber Monday, your might already be thinking about filing your taxes after the turn of the year. Here at Just For Kids LLC we want you to know that if you’re the parents or guardian who pays the tuition for a student at our facility, you’re likely eligible for a child care credit on your taxes.

Understanding The Child And Dependent Care Tax Credit

The Child and Dependent Care Credit is a tax deduction that may be taken on your federal income tax return. As with all tax deductions, there are rules that must be followed to determine whether or not you’re eligible for the credit and exactly how much you can deduct.

The credit is meant to ease the financial burden of working parents who must cover the costs of third party care for their dependents. The costs of care can be deducted for children, elderly, or disabled persons who rely on you for their food, shelter, and other expenses. By providing a tax credit for child care, the government hopes to make it possible for more people to juggle the responsibilities of working a job and raising a family. Now let’s take a more in-depth look at how can claim child care expenses on their taxes.

Qualifying For The Child And Dependent Care Credit

In order to be able to deduct child care expenses on your taxes, you must meet the below criteria:

• You and/or your spouse earned income during the tax year. This income may come from wages, salaries, tips, other taxable employee compensation, or earnings from self-employment.
• The adult deducting the credit must be the custodial parent or main caretaker of the child in question.
• The child care service must have been necessary for the parent or caretaker to work or look for work.
• The child must have lived in your residence for more than half of the year.
• The child must have been under 13 years of age during the tax year in question.
• The child care provider must have been someone other than the filer’s spouse, dependent under the age of 19, or the child’s parent.

Now let’s talk about the part that intrigues most parents: How much money can you actually deduct for child care?

The answer, of course, is that it’s different for everyone. According to the Internal Revenue Service, “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…The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.” One thing that can reduce the actual amount of your child care tax credit is if any dependent care benefits are provided by your employer but deducted or excluded from your income.

Another thing that many parents wonder is if they can deduct the money paid to a neighbor or other babysitter who simply comes to their home to watch the children while they are at work or looking for work. The answer is ‘yes’ but you should be careful about opting for this kind of child care in Chicago. “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,” explains the IRS.

This is just another way that choosing Just For Kids, LLC for child care makes your life easier.

Just For Kids LLC Is Thankful To Be Your Child Care Provider In Chicago!

Contact us to learn more about learning programs, enrollment or to schedule a visit.