How To Use The Child Care Tax Credit To Deduct Expenses

Child care expenses can upset your household budget. When you want to recover some of the expenses paid for child care or daycare during the year, you can do it on your annual tax return.
The IRS created the Child and Dependent Care Tax Credit for working parents who pay a qualified nanny or caregiver. Being able to receive this tax credit is not as simple as adding them up and adding them to the declaration.
You must meet certain specific and rigorous criteria in order to deduct the costs of caring for older children from your annual taxes. In this article, we will tell you what these deduct child care expenses are about and how you can take advantage of them.
What are the child and dependent care credits?
This tax credit was designed by the IRS for working parents who must pay for the care of their children or their parents. Therefore, said credit is exclusive to small children and disabled dependents.
In order to claim it, you have to make sure that your children or dependents meet the age requirements set by the IRS.
The IRS allows taxpayers to claim the credit for a maximum of two children. You can have a credit of up to $3,000 per child, up to a maximum of $6,000 if you have two children.
The credit is applied to any IRS debt, and if the credit exceeds your debts, the difference will be returned to you.
Due to the amount of money that you could receive for this credit, the IRS is very strict and requires that you meet several requirements in order to legally claim it on your return. This means that your statement will be thoroughly reviewed to ensure that you use the credit properly.
Requirements to claim the credit
The IRS has implemented several requirements in order to claim credit for child and dependent care expenses. First of all, you will only be able to claim them if you are working.

You will not be able to deduct the expenses you pay for care at night when you go out on a date with your partner. You also cannot deduct costs associated with hiring a personal assistant or nanny. The expenses are incurred only because you are working and cannot take care of your children by yourself during that time.

You can claim this credit if you hire a family member, but only if they meet these requirements:

  • You are at least 19 years old
  • Not your legal dependent
  • not your spouse
  • It’s not your son
  • Also, the child care credit can only be used for children under the age of 13.
Qualifications to claim the child care credit
Before requesting this credit on your return, it is very important that you understand its purposes and the requirements to legally deduct them from your taxes.
If you abuse this tax credit, you will run the risk of repaying the IRS the credit received. You could also be penalized for fraud and pay expensive penalties.
To avoid abusing this credit, you must understand that it applies only to those expenses that you pay for daily care or babysitting while you are at work. You cannot deduct expenses paid to babysitters when you go out at night. These expenses are considered for personal use and do not apply to this tax credit.
In addition, your status at the time of filing your taxes also affects your ability to take advantage of this credit. If you file separately from your wife, for example, you will not be able to use this credit. You must file a joint return as a married or as a single taxpayer in order to take advantage of the childcare credit.
Likewise, the expenses you pay for child care must go to a qualified child care provider as well as a legal US citizen. You are expected to show both on your tax return. To do so, you must include the daycare’s Social Security number or Employment Identification Number, or EIN on your return.
Finally, you can only claim child care expenses for your children under the age of 13. You can’t use the credit for children over the age of 13 unless they’re physically disabled and can’t care for themselves while you’re at work.
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