Dependent Care Credit Tips
Don’t miss out on this tax break if you use a flex plan for child care costs: You can still claim the dependent care credit to the extent your expenses are more than the amount that you pay through your flexible spending account. The maximum amount of dependent care costs you can fund through an FSA is $5,000. But the credit applies to as much as $6,000 of expenses for filers with two or more kids under the age of 13. In that case, you’d run the first $5,000 of dependent care costs through the FSA, and the next $1,000 would be eligible for the credit on Form 2441. For most filers in this situation, taking the credit will save an extra $200 in taxes.
Remember that summer day camp costs qualify for the dependent care credit. If you send your child to any special day camps this summer, such as those for sports, computers, math or theater, don’t forget to take the tax brel)tk. The same goes for camps your child is attending this summer that focus on improving reading or study skills. But the costs of summer school and tutoring programs aren’t eligible for the credit. Neither are overnight camps. The other rules for the tax credit also must be satisfied. The child must be under 13, and expenses must be incurred so the parents can work.
The tax professionals at Fox Peterson can further assist you to know how to take advantage of these Dependent Care Credit opportunities.