Powerful Tools That Will Streamline Your Tax To-Do List – Income Tax Tips
Have you ever sat down after submitting your income tax return and found that there were moves that you could have made in the previous year that would have saved you money on taxes? If your answer is yes, you are not alone.
What is the Child Care Credit? The Child Care Credit allows parents and guardians of qualifying children and disabled adults to claim the costs of child and dependent care on their tax return. It is a non-refundable credit that does not automatically qualify you for a tax refund. However, if you have costs to claim it is a good idea to do so in order to lower your taxable income and pay less tax.
Who Qualifies? You may be eligible to claim the Child Care Credit if you pay child care expenses for a child between the age of 0 - 12 years. The credit also applies to guardians of adults who are disabled.
There are several tests that you must meet in order to claim the credit. Some examples include qualifying your dependent, earnings, reason for payments, and child care provider. The internal Revenue Services provides a discussion of the criteria on its website.
What you need to claim the credit? In order to take the credit you will need the names and social security numbers for each qualifying dependent. In addition, you must include the identifying numbers and address for each child and dependent care provider. Identifying information can be a social security number for individual providers or a tax identification number if the provider is a business.
Maintain an accurate total of the amount that you pay for child care costs so that you can maximize the tax benefits. Many companies that provide care will give you a summary of your payments at the end of the year.
If you are eligible you will need to file this information on Form 1040 or 1040A. This will allow you to complete the schedule for the Child Care Credit.
You will need a copy of your income tax return handy and internet access. The process is very simple and it will save you lots of time. You can check the status of your federal refund and most states offer the feature, as well.
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