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A Tax Break To Help Working Caregivers Pay For Day Care

A Tax Break To Help Working Caregivers Pay For Day Care

Paying for day care is one of the biggest expenses faced by working adults with young children, a dependent parent, or a child with a disability. But there is a tax credit available to help working caregivers defray the costs of day care (for seniors it’s called “adult day care”).

In Order To Qualify For The Tax Credit, You Must Have A Dependent Who Cannot Be Left Alone And Who Has Lived With You For More Than Half The Year

Qualifying dependents may be the following:

  • A child who is under age 13 when the care is provided
  • A spouse who is physically or mentally incapable of self-care
  • An individual who is physically or mentally incapable of self-care and either is your dependent or could have been your dependent except that his or her income is too high ($4,150 or more) or he or she files a joint return.

Even Though You Can No Longer Receive A Deduction For Claiming A Parent (Or Child) As A Dependent, You Can Still Receive This Tax Credit If Your Parent (Or Other Relative) Qualifies As A Dependent

This means you must provide more than half of their support for the year. Support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. Even if you do not pay more than half your parent’s total support for the year, you may still be able to claim your parent as a dependent if you pay more than 10 percent of your parent’s support for the year, and, with others, collectively contribute to more than half of your parent’s support.

The total expenses you can use to calculate the credit is $3,000 for one child or dependent or up to $6,000 for two or more children or dependents. So if you spent $10,000 on care, you can only use $3,000 of it toward the credit. Once you know your work-related day care expenses, to calculate the credit, you need to multiply the expenses by a percentage of between 20 and 35, depending on your income. (A chart giving the percentage rates is in IRS Publication 503.)

Myrna Serrano Setty, Esq.

Attorney Myrna Serrano Setty is a kind and compassionate Florida Elder Law attorney with extensive experience helping Tampa families protect their elders. Attorney Myrna Serrano Setty writes for all the Florida families who do not understand how to prepare for old age or legally care for their aging parents.

Connect with The Law Firm Of Myrna Serrano Setty, P.A. to get clear and accessible Elder Law guidance and advice that will empower you on a daily basis.

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For example, if you earn $15,000 or less and have the maximum $3,000 eligible for the credit, to figure out your credit you multiply $3,000 by 35 percent. If you earn $43,000 or more, you multiply $3,000 by 20 percent. (A tax credit is directly subtracted from the tax you owe, in contrast to a tax deduction, which decreases your taxable income.)

The care can be provided in or out of the home, by an individual or by a licensed care center, but the care provider cannot be a spouse, dependent, or the child’s parent. The main purpose of the care must be the dependent’s well-being and protection, and expenses for care should not include amounts you pay for food, lodging, clothing, education, and entertainment.

To get the credit, you must report the name, address, and either the care provider’s Social Security number or employer identification number on the tax return. To find out if you are eligible to claim the credit, click here.
For more information about the credit from the IRS, click here and here.

Are You Worried About Taking Care Of A Loved One Who Has Long-term Care Or Special Needs? We Can Help You Put Plans In Place So That Your Family Isn’t Left With A Mess If You Become Incapacitated Or Die

This article is a service of the Law Firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we help you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a free Planning Session. Mention this article to learn how to get this $500 session at no charge.

Myrna Serrano Setty, Esq.

Attorney Myrna Serrano Setty is a kind and compassionate Florida Elder Law attorney with extensive experience helping Tampa families protect their elders. Attorney Myrna Serrano Setty writes for all the Florida families who do not understand how to prepare for old age or legally care for their aging parents.

Connect with The Law Firm Of Myrna Serrano Setty, P.A. to get clear and accessible Elder Law guidance and advice that will empower you on a daily basis.

Call Now to Schedule Your Free 15 Minute Discovery Call (813) 686-7175

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