Child Care Credit and Dependent Tax Credit

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If you pay someone to take care of your child while you work, you know how the cost of caring for a child can take a big chunk out of your home pay. 

Child and dependent care credit

It’s best to keep track of the amount you pay for the care of your child under 13. If you qualify for a maximum of 35% credit and you pay $ 4,000 in childcare each year, for example, you can get credit up to $ 1,400.

If your adjusted total income is more than 43,000, you can get a child and dependent care credit equal to 20% of your expenses.

If you and your spouse are married, you usually have to work or look for a job to get this credit. If you do not have any earned income for the year, you cannot credit or exclude unless you or your spouse are a full-time student or disabled.

You can qualify for a dependent tax credit for someone other than a child and your child.

If your spouse or someone else has been with you for more than half a year and is unable to take care of himself or herself, you may be eligible for credit. Someone other than your spouse must be your dependent, or your dependent if their total income is more than $ 4,300 or they file a joint return, or you or your spouse can be claimed as dependent on someone else’s return.

If a person is unable to take care of himself or herself if a physical or mental problem prevents the person from dressing, cleaning, or feeding, or if he or she needs constant attention to prevent injury to himself or others.

Child tax credit

Child Tax Credit In addition to child and dependent care credit.

Credit starts to decline when your revised consolidated total income reaches $ 200,000- 400,000 if submitted collectively).

If you have a child under the age of 17 at the end of the tax year, you can qualify for a flat $ 2,000 per child.

The child must be a descendant of your son, daughter, step-son, foster child, brother, sister, step-brother, step-sister, step-brother, step-sister, or any of them, such as your grandson, granddaughter, or niece.

He must stay with you for more than half of the year, provide no more than half of his own support, and be dependent on you among other necessities. A child is considered to live with you for a year if the child is born or dies within a year and the child is with you while he or she is alive.

Child tax credits are usually limited to your income tax amount.

However, if your dependent tax credit exceeds your income tax liability, you may qualify for an additional child tax credit. An additional child tax credit is the amount of the child tax credit that remains after you apply for a credit for your income tax liability or 15 2,500 for 15% of your earned income for the year, whichever is less. If you have three or more eligible children, different limits apply to you.

TaxAct calculates child tax credits in Schedule 8812, and additional child tax credits if it applies to you.

Child and dependent care credit

We understand that the cost of child care can be much higher for working families.

 An eligible person may be a child under the age of 13 or a spouse or dependent who has been with the taxpayer for more than half a year and is unable to take care of himself physically or mentally.

Expenses paid for the care of one or more eligible persons so that they are able to work or actively seek work;

Federal Child and Dependent Care Credit is approved; And

New Jersey’s taxable income is $ 60,000 or less.

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