Be Child Care Aware: Tax Relief Available For Child Dependent Care Costs

Cheri M. Gioe, Merrill, Thomas A.  |  4/21/2005 9:26:12 PM

News You Can Use For February 2005


Child care is very expensive, but there is some tax relief available to help with that burden, according to LSU AgCenter child-care associate Cheri Gioe.

"Everyone agrees that child care is very expensive," Gioe says. "The average family can pay as much as 10 percent of its annual income for quality child care, and that percentage is substantially more for poorer families."

To help relieve some of that financial stress, the federal government enacted the Child and Dependent Care Tax Credit.

Based on its provisions, if you paid someone for child care or dependent care for children under the age of 13 so that you could work or look for work, you may be able to reduce your federal income tax by claiming this credit for those expenses expenses on your income tax return. The credit also is available if you paid for care of a spouse or a dependent of any age who is physically or mentally incapable of self care.

"The credit is a percentage, based on your adjusted gross income and the amount of work-related child-care and dependent-care expenses you paid to a care provider," Gioe explains.

The credit can range from 20 percent to 35 percent of your qualifying expenses, depending on your income, according to the LSU AgCenter expert, who says you currently can claim up to $3,000 of expenses paid in a calendar year per child.

Gioe also provides this information on the requirements for claiming this tax credit for child-care and dependent-care expenses. To claim the credit, you must:

–Earn income from taxable wages, salaries and tips.

–If you are married, both parents must work, unless one is physically or mentally incapable of self-care.

–Payments for care may not be paid to someone you claim as a dependent (for example, your 18-year-old daughter).

–You must file your tax return as single, head of household, qualifying widow(er) or married filing jointly.

–The care must have been provided for one or more persons identified on your tax return.

–You (and your spouse, if married) must maintain a home that you live in with the child or dependent.

–You also must provide the name, address and tax identification number of your care provider to the IRS. If the provider is an individual, the Social Security number will need to be provided.

Gioe stresses that there also are other limitations on the amount of credit you can claim and that these limitations may affect you. For more specific information about the Child and Dependent Care Tax Credit, visit www.irs.gov or contact your tax adviser.

The LSU AgCenter’s "Be Child Care Aware!" educational program is designed to educate parents and child-care providers about quality child care. It is funded, in part, through a contract with the Louisiana Department of Social Services’ Office of Family Support.

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Contacts:  Cheri Gioe at (225) 578-6701 or cgioe@agcenter.lsu.edu
Editor:        Tom Merrill at (225) 578-2263 or tmerrill@agcenter.lsu.edu

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