Did you pay someone to take care of your child spouse or dependent ? If you did then you can take benefit of IRS Child Care tax credit and claim tax deduction for the amount you paid to take care of your child spouse or dependent. Here are the things you need to know in order to claim the Child/Dependent Tax Credit.
1. The Dependent must be a dependent child under the age of 13 years. OR
2. Your Spouse or other dependents who are physically or mentally incapable of taking care of your themselves may qualify for dependent care tax credit.
Your and Your Spouse's Income- qualifying for Dependent Care Tax Credit
- The Care must be provided so that you (or you and your spouse if you are married and your spouse is not the dependent in question) can work or look for work during that period. So in particular, if you are married and your spouse is at home by choice, then probably you do not qualify for the dependent care tax credit.
-You must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. If you are married then both you and your spouse must have earned income from the above mentioned sources. One spouse may be considered as having earned income if they were a full-time student or they were physically or mentally unable to care for themselves.
Who can qualify as a Care provider for Dependent Care Tax Credit?
The Care Provider must be identified on your Tax return. The Care provider cannot be one of the following:
- Your Spouse - you cannot simply say you have paid your spouse in order to take care of your dependent and claim the dependent care tax credit.
- You Child who is under age 19 years of age - You cannot claim the Dependent Care Tax credit by saying you paid your child who is below 19 years of age in order to take care of your dependent. This applies even if your child is not dependent on you. From the IRS website, it appears that if you have a child who is over 19 years of age and not dependent on you, then he may qualify as a care provider for your dependent.
Read more on IRS Tax Tip for Dependent Care tax credit.