This post originally appeared in the The Financially Independent Millennial. Are you looking for part-time weekend jobs in your area? Indeed, millions of Americans are looking to make a little extra money by working on the weekends. They might need to supplement their income, keep themselves busy on weekends, among other reasons. Or, perhaps it’s […]
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“All the thoughts and dreams of people throughout history, and all you need’s this little card to borrow ’em for free!” Other children of the ’90s might recognize this lyric from the classic tune “Library Card,” rapped by the cast of the cartoon show Arthur. It’s a silly song, but it’s a solid reminder that […]
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Affordable vacations can be difficult to plan. Maybe you have a dream destination, but you can’t quite save up enough for travel costs. Or maybe you can get yourself there, but you’d have to live on bread and water for the entire trip. If your vacation expenses are just out of reach, a few adjustments […]
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Financial stress and anxiety affect millions of people. No matter how much, or how little, money you make, you have probably felt financial stress at some point in your life. It doesn’t matter how well you think you’ve planned (or haven’t), things can happen that cause you stress or anxiety. Chances are you’ve had to deal with one […]
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By Jason Alderman
For harried parents, the definition of true panic is realizing in April that you forgot to enroll your kids for summer day camp and now all the slots are filled. Cut to: as the school year ends, you’re feverishly trying to find adequate daycare because neither of you can take time off work to watch the kids.
I know of one such couple; with any luck you’re more organized than they were. In fact, bonus points if you thought ahead and signed up during last fall’s open enrollment for a dependent care flexible spending account (FSA), which allows you to pay for childcare using pretax dollars.
But if you didn’t enroll in an FSA or your employer doesn’t offer them, there’s still a way to get a tax break on your summer daycare expenses (and other dependent care costs throughout the year): the Child and Dependent Care Credit. Here’s how it works:
If you pay someone to care for your young child (or other qualifying dependents) so you can work – or look for work – you may be eligible for this tax credit worth up to 35 percent of those expenses. Because it’s the IRS doling out the credit, there are a number of qualifying provisions:
The maximum amount of expenses that qualify for the Child and Dependent Care Credit is $3,000 a year for one dependent and $6,000 for two or more. If your adjusted gross income is less than $15,000 you generally can claim a credit for 35 percent of eligible expenses. The percentage gradually decreases, the higher your income. It caps out for those earning more than $43,000, who can claim 20 percent.
To learn more about the Child and Dependent Care Credit, see IRS Publication 503 and Chapter 32 of IRS Publication 17 at www.irs.gov.
Bottom line: If you’re paying someone to take care of your kids while you’re at work, make sure you’re taking advantage of the available tax savings.
Jason Alderman directs Visa’s financial education programs. To Follow Jason Alderman on Twitter: http://ift.tt/1hOSpMr
