I realize that for many of us, tax season isn’t all rainbows and butterflies. However, with the tax deadline a little over a month away, we thought it would be a good idea to highlight the Child and Dependent Care Credit that many parents are eligible for. While we encourage you to visit the IRS website or direct your questions to your accountant, here are a handful of things you may want to know before you file.
What is the Child and Dependent Care Credit?
Very simply put, it’s a tax break for parents and custodial guardians who have paid for someone to care for their child while they are at work. Child care centers, summer camps, day camps, nanny care, and at home providers are all types of child care that qualify for the Child and Dependent Care Credit. Parents can get up to $3000 credit for one child or $6000 for two or more.
What information do I need to claim this on my taxes?
You will need the name of the organization or caregiver, the address, the phone number, and the tax identification number. Organizations will have a tax identification number, but private in home providers will need to provide their social security number. While some organizations provide this number clearly on their literature, invoices, receipts, or websites, others only provide it upon written request. In order to make this easier for you, we’ve included a tax ID request template below or you can use the IRS Request form:
My son (Oscar Meyer) attended your Ultimate Summer Camp last summer and loved it. Thank you. For tax purposes, could you please provide me your Federal Tax ID number?
Sincerely, Jack Sparrow
Who is eligible for this tax credit?
- Parents and custodial guardians of a child who was under the age of 13 when care was provided.
- Parents and custodial guardians of a child who is mentally or physically handicapped and cannot provide their own self-care
- In this case, the dependent had to have lived with the parent for more than half a year.
- According to the IRS website, “you may not take this credit if your filing status is married filing separately.”
- If you aren’t sure if you qualify, take 10 minutes and check out this eligibility tool that the IRS has created for your convenience.
Other things to note…
The actual amount that you are able to claim for this is dependent on how much you paid. If your husband or wife is a stay-at-home parent, you cannot benefit from this tax credit. It is intended to help parents who have child-related care expenses. As a reminder, if you have questions about the Child and Dependent Care Tax Credit, please contact your certified public accountant or the IRS.