Cheat Sheet to Claiming Child Care Expenses
As of 2015, child care could cost more than $18,000 a year, according to the National Association of Child Care Resource and Referral Agencies. But, if you paid a babysitter, summer camp, in-home day care, or an educational child care provider like Kiddie Academy to care for a qualifying child under age 13, you may qualify for a tax credit. You could receive a tax credit of up to 35 percent of qualifying child care expenses, or up to $3,000 for one child, or up to $6,000 for two or more children.
The child and dependent care credit provides a tax break for many parents who are responsible for the cost of childcare. The credit, which varies depending on the taxpayer’s earned income, is based on the expenses paid to provide child or dependent care services so that parents can work.
This is a tax credit, directly reducing your taxes, “dollar for dollar,” rather than a tax deduction, which simply reduces the amount of income upon which you pay tax. A $1,000 deduction, for example, might reduce your tax bill by only $150 or $200. A $1,000 tax credit cuts your tax bill by $1,000.
Check out our Cheat Sheet for some things you should know about the Child and Dependent Care Tax Credit before Tax Day on Monday, April 18!