U.S. Child and Dependent Care Credit

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U.S. Child and Dependent Care Credit

 

How to balance the family and work is a complicated topic for working couples. More and more family choose to send children to day care center to take care of their children during working time. According to IRS publication, you may be able to claim the U.S. child and dependent care credit if you paid expenses for the care of a qualifying individual to enable you (and your spouse, if filing a joint return) to work or actively look for work.

 

The credit is limited to $3,000 for one qualifying individual or $6,000 for two or more qualifying individuals. Expenses paid for the care of a qualifying individual are eligible expenses if the primary reason for paying the expense is to assure the individual’s well-being and protection. If you received dependent care benefits that you exclude or deduct from your income, you must subtract the amount of those benefits from the dollar limit that applies to you.

 

A qualifying individual for the child and dependent care credit is:

  • Your dependent qualifying child who was under age 13 when the care was provided,
  • Your spouse who was physically or mentally incapable of self-care and lived with you for more than half of the year, or
  • An individual who was physically or mentally incapable of self-care, lived with you for more than half of the year, and either: (a) was your dependent; or (b) could have been your dependent except that he or she received gross income of $4,200 or more, or filed a joint return, or you (or your spouse, if filing jointly) could have been claimed as a dependent on another taxpayer’s 2019 return.

 

You must identify all persons or organizations that provide care for your child or dependent. You must report the name, address, and TIN (either the social security number or the employer identification number) of the care provider on your return. If the care provider is a tax-exempt organization, you need only report the name and address of the organization on your return. You can use Form W-10, Dependent Care Provider’s Identification and Certification to request this information from the care provider. If you cannot provide information regarding the care provider, you may still be eligible for the credit if you can show that you exercised due diligence in attempting to provide the required information. The care provider can’t be your spouse, the parent of your qualifying individual if your qualifying individual is your child and under age 13, your child who is under the age of 19, or a dependent whom you or your spouse may claim on your return.

 

To claim this credit, you need to complete Form 2441, Child and Dependent Care Expenses PDF and attach to your tax return form (e.g. Form 1040).

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