After learning about the high costs of daycare, the US federal government opted to pay for a portion of the fees known as the Child and Dependent Care Credit. Read on to learn if childcare costs can be written off from your taxable income!
The Child and Dependent Care Credit may be claimed by parents who hire someone to look after their kids or another member of their family while they are at work.
Child And Dependent Care Credit
This program was established by the federal government of the United States as a tax relief for working individuals who are in need of additional funds to assist in the payment of the costs associated with providing care for a child or dependant who has a disability.
In the US, raising a family has never been more expensive, particularly when employers insist on having employees return to their offices and childcare costs rise.
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How To Qualify?
To qualify for the child and dependent care credit, you must have paid someone to take care of either a small kid, your spouse, or any other person who is recognized as a dependant.
The child must be under the age of twelve, and the spouse must be incapable of caring for himself or herself. At least six months out of the previous 12 months should have been spent with the dependant at your house.
Tax deductions up to a maximum of 35% of income are also possible in 2023. A taxpayer may also claim up to $6,000 for two or more children, and up to $3,000 for one child.
Since these tax credits are non-refundable, taxpayers who do not owe any taxes that can be used to offset them cannot get a refund for them.
But, a child must be disabled in order to qualify. Otherwise, a kid cannot be eligible for the Dependent Care Tax Credit or the DCFSA if they are older than 13 years old.
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