|
Child and Dependent
Care Tax Credit: The IRS allows an income tax credit
of up to $6,000 of dependent care expenses if you have two
or more dependents (up to $3,000 for one dependent). The
amount of the credit is based on your adjusted gross income
and applies only to your federal taxes. This applies to
qualifying day camp expenses as well. Visit the FSA
Feds web site for more information.
A Dependent Care
Flexible Spending Account allows parents to be
reimbursed on a pre-tax basis for child care or adult dependent
care expenses for qualified dependents that are necessary
to allow parents to work, look for work, or to attend school
full time. Visit the FSA
Feds DCFSA web page for more information.
Day Camp Tax
Credit: In certain circumstances, day care expenses,
including transportation by a care provider, may be considered
dependent care services and paid with pre-tax dollars. Click
on this Internal
Revenue Service link for more information.
See below for some relevant
excerpts from this IRS page:
"Section 21 allows
a nonrefundable credit for a percentage of expenses for
household and dependent care services necessary for gainful
employment. For taxable years beginning after December 31,
2004, the credit is available to a taxpayer if there are
one or more qualifying individuals with respect to that
taxpayer. For those years, a qualifying individual is defined
in section 21(b)(1) as the taxpayer’s dependent (as
defined in section 152(a)(1)) who has not attained age 13,
the taxpayer’s dependent who is physically or mentally
incapable of self-care and who has the same principal place
of abode as the taxpayer for more than one-half of the taxable
year, or the taxpayer’s spouse who is physically or
mentally incapable of self-care and who has the same principal
place of abode as the taxpayer for more than one-half of
the taxable year."
"4. Employment-Related
Expenses
Under section 21(b)(2)(A), expenses are employment-related
only if (1) the expenses are primarily for household services
or for the care of a qualifying individual, and (2) the
taxpayer’s purpose in obtaining the services is to
enable the taxpayer to be gainfully employed."
"Section 21(b)(2)(A)
provides that expenses for day camps may be employment-related
expenses, if otherwise qualified. The IRS has received many
inquiries about whether the cost of a day camp that specializes
in a particular activity, such as soccer or computers, may
be an employment-related expense. To provide certainty for
taxpayers and enhance administrability, the proposed regulations
provide that the full amount paid for a day camp or similar
program may be for the care of a qualifying individual although
the camp specializes in a particular activity."
"(3) Transportation
expenses
Section 1.44A-1(c)(3)(i) provides that expenses for transportation
of a qualifying individual between the taxpayer’s
household and a place outside the taxpayer’s household
where care is provided are not for care. The proposed regulations
provide that the cost of transportation (such as transportation
to a day camp or to an after-school program not on school
premises) furnished by a dependent care provider may be
an employment-related expense if all other applicable requirements
are satisfied."
TOP
|
