Tip #3 -- Take the Child and Dependent Care Credit
If you worked, looked for work, or were a full-time student
during the tax year, and paid somebody to care for your child while you were
away, you are eligible to take the child and dependent care credit. It is not a
refundable credit, meaning it will reduce the tax you owe but it won't get you
a refund if you wouldn't get one already, and to take it you need to be able to
file as married filing jointly, head of household, or single.
The Child and Dependent Care Credit reduces your tax bill by
up to 35% of the amount you paid for childcare. Lower-income filers get a
bigger portion of childcare expenses refunded than do higher-income filers, but
people at all income levels get some benefit. You can't take the credit on
childcare paid for through a job-sponsored flexible spending plan, and only the
first $3000 of childcare expenses for one child, or $6000 for two or more
children, are eligible for the credit. Qualifying expenses include:
daycare
expenses
day
camp expenses, if you used the camp in place of daycare and it was not
sleep-away camp
kindergarten
or nursery school expenses (if school cost is separate from childcare
cost, only the childcare cost portion may be claimed)
To take the child and dependent care credit, use form 2441
if you are filing on form 1040, or schedule 2 if you are filing on form 1040A.
You'll need your provider's name, address, and tax identification number. If
you have questions, consult the instructions for form 2441 or schedule 2.
Tip #4 -- Take the Child Tax Credit
The child tax credit will reduce your tax by up to $1000 for
each of your children. This is not a refundable credit, so if you only owe $800
in tax, you won't get a $200 refund. It's an easy tax to figure, though, and
you get the full amount of the credit unless you earn more than $110,000 if
you're married filing jointly, $55,000 if you're married filing separately, or
$75,000 for all others. If you earn more than that, your credit is
reduced. In order to claim the credit,
your children must be:
Younger
than 17 years old at the end of the tax year
Claimed
as dependents on your return, and
US
citizens
Claim the credit on form 1040 or 1040A. Look for
instructions in the manuals that come with the forms, or on IRS publication
972, Child Tax Credit.