Do you pay someone to watch your children while you and your spouse are away at work? At least you can derive some tax benefit for the expenses you incur.
Strategy: Take advantage of the dependent care credit (commonly called the “child care credit”). The credit is available for the costs of caring for children under age 13 while you’re gainfully employed.
How much is the child care credit? It depends. The maximum credit equals 35% of the first $3,000 of qualified expenses for one child; $6,000 for two or more children. Qualified expenses cannot exceed your earned income (if single) or the earned income of the lower-earning spouse.
However, the credit percentage is gradually reduced based on your income until it reaches the 20% level for taxpayers with an AGI above $43,000. High-income individuals can snag a maximum $1,200 credit (20% of $6,000) for two or more children.
Be aware that numerous “ins” and “outs” to...(register to read more)
- Small Business Tax Deduction Strategies No matches