PATP Tax Talks: Summertime Childcare Expenses

Summertime Childcare Expenses

Here in Charlotte, the temps average out around high 80s to low 90s, so it's a telltale sign that summer is here! And, many of our clients who work or are on the hunt for their next work assignment this summer must make some sort or childcare arrangements for their chaps during the summer vacation. (PATP disclaimer 1: this info will only apply if your chaps are under the age of thirteen)

Of course, we would like to inform you all that the Child and Dependent Care Credit (the technical IRS term) is not only available for expenses incurred during the hot and hazy days of summer, but also throughout the rest of the year. We would like to share a few facts with our valued clients about a tax credit available for these childcare expenses.

1. Yes, the cost of day camp can count as an expense towards the child and dependent care credit. However, expenses for overnight camps do not qualify. So, yes, if they spend the night, you can cancel the idea of counting it. Trust me, I love sending my kids overnight to places, but I want you all to know that IRS has no love for you on this one...:(

2. Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you may be eligible to get some tax benefit if you qualify for the credit.

3. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income. If you don't work, you don't get the credit. And, for the married folks, BOTH parents must have positive income! Otherwise, IRS feels that the non-working spouse can care for the kids while the other is out working. Again folks...I'm speaking as the tax man, so please don't shoot the messenger.

4. You may use up to $3,000 of the unreimbursed expenses(not paid/reimbursed using Flex Spending funds) paid during the year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit. (Disclaimer 2: the maximum credit amount is $6,000.)

Remember, your questions and comments are what will make this blog more valuable and worthwhile! Feel free to post your questions or comments here, or you can give us a call at (866) 510-5477 or via email info@proctortaxprep.com.