Tax Deductions Could Make Summer Child Care More Affordable

With the arrival of summer, many working parents may incur additional expense with regards to child care, especially for certain school-age children out for the summer break. The Oklahoma Society of Certified Public Accountants says, depending upon requirements related to taxable income of the parents and ages of the children, these additional costs may qualify for the Child and Dependent Care Credit, claimed on IRS Form 2441.

Here are six facts the OSCPA wants you to know about tax credit available for child care expenses:

1. The cost of day camp may count as an expense toward the Child and Dependent Care Credit, even if the camp specializes in a particular activity, such as computers, art or soccer.
2. Expenses for overnight camps do not qualify.
3. Expenses you pay for household services meet the work-related expense test if they are at least partly for the well-being and protection of a qualifying person. Household services include housekeeping and cooking.
4. You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. However, do not count any amounts you pay to a dependent you can claim an exemption, your child who was under age 19 at the end of the year, or a person who was your spouse at any time during the year.
5. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
6. 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 figure the credit.

The Child and Dependent Care Credit is available for expenses incurred during the lazy, hazy days of summer and throughout the rest of the year. For more information, including rules for claiming this credit for your spouse or for dependents age 13 or older who are unable to care for themselves, review IRS Publication 503, Child and Dependent Care Expenses. This publication is available online at http://www.irs.gov/, or by calling (800) TAX-FORM (800-829-3676).

For more money tips, a free CPA referral or free 30-minute consultation, visit www.KnowWhatCounts.org.

With more than 6,000 members in public practice, industry, government and education, the OSCPA is Oklahoma's only statewide professional association of CPAs. Since 1918, the organization has continued to provide professional education, conduct quality reviews and promote and maintain high standards of integrity and competence within the accounting profession. The Money Management (Dollars and Sense) columns are a joint effort of the AICPA and the Oklahoma Society of CPAs, as part of the profession's nationwide 360 Degrees of Financial Literacy program.

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