Equine Accounting: Assistance from the IRS to pay for Child Care

Whether you work for yourself or someone else, worrying about care of your children while you are at work can cause both financial and emotional stress. Well relax; the IRS is here to help. The Child and Dependent Care Credit is available to many taxpayers for care incurred during vacations and throughout the year. For parents who are working (or looking for work) and arrange for day care for their children under thirteen years of age, this credit may provide some reimbursement toward the cost of this care.
What you need to know:

•You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to calculate the credit.
•The range of the actual credit is between 20 and 35 percent of your qualifying expenses, depending upon your income. Unlike many other deductions and credits, there is no upper limit on the amount of your adjusted gross income.
•You (and your spouse if filing jointly) must have earned income during the year.
•Both in-home sitters and daycare facilities outside the home qualify you for some tax benefit if you are eligible for the credit.
•The cost of day camp may count as an expense towards the credit. However, expenses for overnight camps do not qualify.
•When you submit your tax return, you must complete IRS Form 2441 and provide the name and tax identification number for the individual providing the care.
•This is a tax CREDIT, which directly reduces the amount of tax due on your return. However, it is a nonrefundable tax credit - which means that it cannot reduce the amount of tax due to less than zero.
Please see IRS Publication 503 (http://www.irs.gov/pub/irs-pdf/p503.pdf) for more information.