Child Care Credit 2011

IRS cares!

If you paid someone to care for your child under age 13, so you could work or look for work in 2011, you may be eligible to take the credit for the expenses.

Rules for Divorced or Separated parents:

 If you drove away those scary monsters in the closet for more nights in 2011, than the other parent, you are the custodial parent and can claim the credit. It pays, to drive away monsters!

However, if the child lived equal number of nights of 2011, with each parent, the custodial parent is the one with higher adjusted gross income and claims the credit.

Note:  Child support payments received by you are not included in your gross income and are not considered as earned income for figuring this credit.

Which expenses qualify and which do not?

·         Services needed to care for the child as well as run the home for example, cook, maid, babysitter, housekeeper, cleaning person. Chauffeur or gardeners, DO NOT qualify.

·         Employment taxes paid on wages for child care services qualify.

·         Cost of clothing or entertainment DOES NOT qualify.

·         Cost of a day camp, even if it specializes in a particular activity, such as soccer qualifies.

·         Expenses for sending your child to an overnight camp, summer school or tutoring program DO NOT qualify.

·         Medical expenses can be itemized and if so claimed, they DO NOT qualify.

Details in Numbers:

The child care credit can be up to 35% of your qualifying expenses, depending upon your adjusted gross income.

For 2010, you may use up to $3,000 of expenses paid in a year for one qualifying child or $6,000 for two children to figure the credit.

The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.

If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer and may have to withhold and pay social security and Medicare tax and pay federal unemployment tax.

Refer Publication 501 Exemptions, Standard Deduction, and Filing Information for more details.