Action Line: Take care in taking Child and Dependent Care tax credit
BY PHIL MULKINS World Action Line Editor
Tuesday, March 20, 2012
3/20/12 at 7:30 AM
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Dear Action Line: What all is involved with claiming the tax credit for Child and Dependent Care Expenses? - R.O., Tulsa.
"If you paid someone to care for your child, your spouse, or one of your dependents in 2011, you might qualify for claiming the Child and Dependent Care Credit when filing your 2011 federal income tax return," said Internal Revenue Service spokesman David Stell. He points out the things you should keep in mind about claiming the credit.
Qualifying persons: The care must have been provided for one or more "qualifying persons" - your dependent child age 12 or younger when the care was provided or your spouse or certain other individuals who are physically or mentally incapable of self-care. They must be identified on your tax return. The care must have been provided so that you or your spouse (if married filing jointly) could work or look for work, said Stell. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
Must have earned income: You - and your spouse if filing jointly - must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if a full-time student or physically or mentally unable to care for themselves.
Those who cannot qualify: The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return or to your child who will not be age 19 or older by the end of the year even if not your dependent. You must identify the care provider(s) on your tax return.
At least half the year: The qualifying person must have lived with you for more than half of 2011. Exceptions include birth or death of a qualifying person, or a child of divorced or separated parents. See IRS "Publication 503, Child and Dependent Care Expenses," tulsaworld.com/IRSPub503
Limits: The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income. For 2011, you may use up to $3,000 of expenses paid for one qualifying individual or $6,000 for two or more qualifying individuals.
Employer help: The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income, such as a flexible spending account for day-care expenses.
Household employer: If you hired someone to come into your home to care for a dependent or spouse, you are considered a "household employer" and have to withhold and pay Social Security and Medicare taxes and federal unemployment tax. See IRS "Publication 926, Household Employer's Tax Guide" tulsaworld.com/IRSPub926 Publications are also available at 800-829-3676.
Original Print Headline: Take care in taking tax credits
Submit Action Line questions by calling 918-699-8888, emailing phil.mulkins@TulsaWorld.com or by mailing them to Tulsa World Action Line, PO Box 1770, Tulsa OK 74102-1770.
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