Many parents pay for child care or day camps in the summer while they work. Those costs may qualify for a federal tax credit.
The Internal Revenue Service provided the following facts about the Child and Dependent Care Credit.
• Your expenses must be for the care of one or more qualifying persons. Your dependent children under age 13 usually qualify.
• Your expenses for care must be work-related. This means that you must pay for the care so that you can work or look for work. This rule also applies to your spouse if you file a joint return. The rule is met during any month your spouse is a full-time student or physically or mentally incapable of self-care.
• You must have earned income, such as from wages, salaries and tips or net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month as a full-time student or incapable of self-care. This rule also applies to you if you file a joint return.
• As a rule, if you’re married, you must file a joint return to take the credit. But this rule doesn’t apply if you’re legally separated or if you and your spouse live apart.
• You may qualify for the credit whether you pay for care at home, at a day care facility or at a day camp.
• The credit is a percentage of the qualified expenses you pay. It can be as much as 35 percent of your expenses, depending on your income.
• The total expense that qualifies for the credit in a year is limited to $3,000 for one qualifying person or $6,000 for two or more.
• Overnight camp or summer school tutoring costs do not qualify. You can’t include the cost of care provided by your spouse or your child who is under age 19 at the end of the year. You also cannot count the cost of care given by a person you can claim as your dependent. Special rules apply if you receive dependent care benefits from your employer.
• Keep all your receipts and records. Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your tax return.
• Remember that the credit is not only a summer tax benefit – you may be able to claim the expense of care throughout the year.
For more information, visit Publication 503 at irs.gov.