The IRS began accepting tax returns for 2014 on January 20th, 2015. That’s exciting stuff for the office here at Padgett, as we’re rearing to get moving on another season of stellar work for our clients.
Let’s go over some tips for our taxpaying clients. Follow along with these and both taxpayer and tax preparer will experience a more pleasant tax season for the year.
Little known tax credits: The child care tax credit
Did you know that there’s a tax credit for parents and guardians to offset child care costs?
The maximum amount for one child’s care costs eligible for coverage is $3,000. Two or more children’s care costs eligible for coverage is $6,000. This number is dependent on, among other things, your household income. The sliding scale generally benefits families with lower annual income; i.e., the less you make, the higher tax credit you’re more likely to receive.
As with any tax credit, there are a number of qualifiers required by the IRS. They include the following:
- The child or children must be under the age of 13.
- Both you and your spouse must be working, looking for work, or be a full-time student.
- The person that you pay for child care cannot be your spouse or parent of the qualifying child. It may also not be another of your dependents.
- The person that you pay for child care cannot be the neighborhood girl you pay under the table. All payments must be square with the IRS.
- The child must be in your custody for more than half the year.
Important to note is that this credit also extends to disabled adults, including disabled spouses. This is applicable to adults either mentally or physically disabled.
Also important to note is that the non-refundable tax credit will reduce taxable income versus the refundable tax credit which is actually money in your pocket from the IRS.
Photo by surlygirl
Photo by surlygirl
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