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Child care credit: No sibling rivalry

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in Small Business Tax

Q. We’re paying my adult younger sister to watch our children while we work. Can we claim the child care credit? A.S., Hibbing, Minn.

A. Yes. The dependent care credit (aka the “child care credit”) is available for qualified expenses enabling you to be gainfully employed. The tax law says the caregiver can’t be your spouse, a parent of the child, someone you may claim as your dependent, or a person who will not be age 19 or older by the end of the year. This leaves it wide open for an adult sibling who is properly identified on your tax return.

Tip: The maximum credit is generally 20% of the first $3,000 spent for one qualifying child and 20% of the first $6,000 for two or more qualifying children.

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