By now, everyone with a child under age 13 is familiar with Child and Dependent Expenses, a credit that will allow you to deduct up to 35% of the expenses that you pay on behalf of a qualifying person to allow you to work. But I bet that you didn’t know that children are not the only ones that qualify. Here are other lesser known qualifying individuals that will also qualify you for this credit:
· Your spouse who is unable is unable to care for himself or herself mentally or physically (cannot dress, feed, or clean themselves or who may otherwise injure themselves or others) that has resided with you for more than half the year.
· An individual of any age:
o That is unable to care for himself or herself mentally or physically (cannot dress, feed, or clean themselves or who may otherwise injure themselves or others).
o Lived with you for more than 6 months.
o That qualifies as your dependent
o That could have qualified as your dependent except for the following:
§ Their income exceeded $3,700
§ They filed a joint return
o The qualifying individuals can be the following:
§ Your older child
§ Qualifying relative (niece, nephew, sister, brother, uncle, aunt, mother, father, grandmother, grandfather)
Now to address the qualifications to claim the credit:
1. You must either have income from work or are a full time student for at least five months out of the calendar year.
2. The expenses must be incurred to allow you to work.
3. Other than for nursery, daycare, after school care, or babysitters, you may deduct payments made to the following that provided qualifying care:
a. Your older child over age 18 that you cannot claim as a dependent.
b. Other individuals that are related to you that you cannot claim as a dependent.
c. A dependent care center that is compliant with all state and local regulations.
d. A household employee, such as a housekeeper, maid, or cook, whose services are in part related to the well being and protection of the qualifying person. The expenses for these services must be separated from the expenses incurred for the upkeep of your home.
4. Your filing status must be one of the following:
b. Head of Household
c. Married Filing Jointly
d. Married Filing Separately under the following stipulations:
i. Legally separated from your spouse under a divorce decree or separate maintenance decree.
ii. Living apart from your spouse and all the following statements are true:
1. The qualifying person lived with you for more than half the year.
2. You paid more than half the cost of keeping up your home for the year.
3. Your spouse did not live in your home for the last 6 months of the year.
In short, not only your kids but others in your family that require outside care that would allow you to continue your education or being their provider benefit from the Child and Dependent Care Expense. In shedding new light on this old credit, it becomes more than a tax credit; it becomes peace of mind and may be an additional way to reduce your tax time burden.
For more information, visit the IRS website at http://www.irs.gov.