Schools out for summer and you may have been trying to figure out more ways to save. If you’re like most parents, you’re probably wondering how you’re going to keep your kids busy without breaking the bank. You may also be considering entering the job market again this summer, but don’t know how you can afford to work with the prices of daycare these days.
Whether you are a parent already working or you are planning to enter the job market again this summer, you may be surprised to find that you can save up to $2,100 on your taxes when you file just because you sent your kids to summer day camp.
Under the Child and Dependent Care Credit, you may receive a credit up to $1,050 of your expenses for one child under 13 and up to $2,100 for two or more children under 13 and there is no age limit if they are disabled. There is one catch though, overnight camps do not count.
There are a few qualifications necessary in order for you to save with the Child and Dependent Care Credit as follows:
- The care must be provided for a qualifying person who is your dependent under the age of 13 when care was provided. Note: Care may also be provided for your spouse or certain other dependents who are physically and mentally incapable of self-care.
- Your child or qualifying person must be in summer camp or daycare so that you can work or look for work.
- Your tax filing status must be single, married filing jointly, head of household, or qualifying widow(er) with your dependent listed on your tax return.
- The child must have lived with you for more than half of the tax year in question.
- The care provider must be identified on your tax return and cannot be your spouse, the parent of your qualifying person, or your dependent child under the age of 19 by the end of the tax year.
Knowing about this little known tax credit may also help you decide if you are on the fence about going back to work. This will also give you peace of mind knowing your kids are staying active in a safe place while you save (make) money.
Don’t worry about knowing these tax rules. TurboTax will ask you simple questions and give you the tax deductions and credits you’re eligible for based on your answers. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return.
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