Claiming child care credit for “parent’s morning out” daycare

For example, look at the following example as it relates to the child care credit. “I work full time but my wife typically only works 1 day/week. The rest of the time she is a stay at home mom. On one of the days that she is home, my son attends a half day daycare. Can I claim this credit even though she isn’t actually working while he attends daycare.”


Claiming child care credit for “parent’s morning out” daycare

If your wife has SOME earned income, you should be able to claim the Child and Dependent Care Credit. You’ll need to get documentation from the care provider for the amount paid, and fill out 2441. If your wife didn’t have any earned income for the year, you won’t be able to claim this credit. She does not have to work full time, just have some earned income.


Claiming Child Care Credit Working Parents

Basically, you can claim the child care credit for the day she’s working:

Work for part of year. If you work or actively look for work during only part of the period covered by the expenses, then you must figure your expenses for each day. For example, if you work all year and pay care expenses of $250 a month ($3,000 for the year), all the expenses are work related. However, if you work or look for work for only 2 months and 15 days during the year and pay expenses of $250 a month, your work-related expenses are limited to $625 (21 2 months × $250).

See the following IRS Publication 503 for more information about working part-time and claiming the child care credit on your tax return. The child and dependent care tax credit is worth 20% to 35% of your day care expenses depending on different circumstances. Primarily,  the percentage of the child care credit depends on your adjusted gross income. A full chart of the percentage rates is also found in Publication 503 which can be found at the link below.


IRS Publications on Child Care Credit

What is the Child Tax Credit

What is the child tax credit?

The child tax credit is one of the most important tax credits that allows parents to claim a credit of $1,000 for each qualifying child they have Thus, for example, a taxpayer with three qualifying children will be entitled to a credit of $3,000. Enacted in 1997 and expanded with bipartisan support since 2001, the Child Tax Credit (CTC) helps working families offset the cost of raising children. The CTC includes a refundable component, the Additional Child Tax Credit.

Using the Child Tax Credit

This means that if the value of the CTC exceeds the amount of federal income tax a family owes, the family may receive part or all of the difference in the form of a refund check.  As a result, many working families can still benefit from the credit even if their incomes are so low that they owe little or no federal income tax in a given year.


For purposes of the child tax credit, A qualifying child is someone who:

  • Lives in your home for over half the year
  • Is your child, stepchild, adopted child, or foster child, or your brother or sister or stepsibling (or a descendant of any of these),
  • Is under 17 years old at the close of the year
  • Does not provide over half of his or her own support for the year, and
  • Is a U.S. citizen or resident.

The qualifying child must also be younger than you, must not file a joint return (other than a joint return filed solely to get a refund), and must be someone for whom you are allowed a dependency deduction. There are special rules that will help decide who is entitled to the child tax credit if more than one parent could claim the child as a dependent.

The dependency deduction that may be claimed for a qualifying child isn’t reduced or otherwise modified because of the child tax credit that is received. Important, where parents are divorced and the custodial parent signs away his or her right to the dependency exemption, the child credit is also lost. See more information about the EITC for divorced parents.


The child tax credit begins to get reduced as income increases

The child tax credit begins to get reduced as income increases. The amount of the credit allowable is reduced by $50 for each $1,000 (or part of $1,000) of modified adjusted gross income (AGI) above a threshold amount. This would be $110,000 on a joint return, and $75,000 for single filers and heads of household, and $55,000 for married individuals who file separate returns.

For example, a married couple filing jointly who have one qualifying child are entitled to a reduced credit of $950 if their modified AGI is more than $110,000 but not more than $111,000. They lose the credit completely if their modified AGI is more than $129,000.


Refundable Child Tax Credit

If the otherwise allowable child tax credit is more than the amount of income tax you owe, the excess is refundable to the extent of the greater of:

  1. 15% of earned income above $3,000 (for tax years beginning in 2009 through 2017), or
  2. for taxpayers with three or more qualifying children, the excess of the taxpayer’s social security taxes for the year over the taxpayer’s earned income credit for the year.

Earned income includes combat pay (excludable from gross income) for these purposes.

Taxpayers with earned income of $3,000 or less for 2009 through 2017 will not qualify for any refundable child tax credit under the 15% rule. However, they may qualify under the “excess of social security taxes over earned income credit” rule. Credits that cannot be used to offset income tax owed (because the credits exceed the amount of tax) and that aren’t refundable are lost.

If you expect the child tax credit to reduce your income tax, you may want to reduce your wage withholding. You can do this by filing a new Form W-4, Employee’s Withholding Allowance Certificate, with an employer If you qualify for the child tax credit, you may also qualify for the earned income credit. You can claim both credits if you meet the requirements for both. To calculate your precise added tax credit, you’ll have to complete a work sheet and fill out Form 8812 and send it along with your individual tax return.


Impact of the Child Tax Credit

Despite these shortcomings, the CTC is a powerful weapon against poverty.  In 2013 it protected approximately 3.1 million people from poverty, including about 1.7 million children, and reduced the severity of poverty for another 13.7 million people, including 6.8 million children. The American Taxpayer Relief Act, enacted in January 2013, made the 2001 and 2003 expansions permanent but extended the 2009 provisions only through 2017.

child care tax credit

10 Facts About the Child and Dependent Care Credit

The Child and Dependent Care Credit can help offset some of the costs you pay for the care of your child, a dependent or a spouse.


Here are 10 facts the IRS wants you to know about the child and dependent care credit expenses.

1. If you paid someone to care for your child, dependent or spouse last year, you may qualify for the child and dependent care credit. You claim the credit when you file your federal income tax return.

2. You can claim the Child and Dependent Care Credit for “qualifying individuals.” A qualifying individual includes your child under age 13. It also includes your spouse or dependent who lived with you for more than half the year who was physically or mentally incapable of self-care.

3. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.

4. You, and your spouse if you file jointly, must have earned income, such as income from a job. A special rule applies for a spouse who is a student or not able to care for himself or herself.

5. Payments for care cannot go to your spouse, the parent of your qualifying person or to someone you can claim as a dependent on your return. Payments can also not go to your child who is under age 19, even if the child is not your dependent.

6. This credit can be worth up to 35 percent of your qualifying costs for care, depending upon your income. When figuring the amount of your credit, you can claim up to $3,000 of your total costs if you have one qualifying individual. If you have two or more qualifying individuals you can claim up to $6,000 of your costs.

7. If your employer provided dependent care benefits, special rules apply. See Form 2441, Child and Dependent Care Expenses for how the rules apply to you.

8. You must include the Social Security number on your tax return for each qualifying individual.

9. You must also include on your tax return the name, address and Social Security number (individuals) or Employer Identification Number (businesses) of your care provider.

10. To claim the credit, attach Form 2441 to your tax return. If you use IRS e-file to prepare and file your return, the software will do this for you.

For more information see Publication 503, Child and Dependent Care Expenses, or the instructions for Form 2441. Both are available at or by calling 800-TAX-FORM (800-829-3676).

child care tax credit

Expanded Adoption Credit Available for Tax-Year 2010

WASHINGTON — The Internal Revenue Service today issued guidance on the expanded adoption credit included in the Affordable Care Act. The IRS also released a draft version of the form that eligible taxpayers will use to claim the newly-expanded adoption credit on 2010 tax returns filed next year.

The Affordable Care Act raises the maximum adoption credit to $13,170 per child, up from $12,150 in 2009. It also makes the credit refundable, meaning that eligible taxpayers can get it even if they owe no tax for that year. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees and travel expenses. Income limits and other special rules apply.


Expanded Adoption Credit Available for Tax-Year 2010

In addition to filling out Form 8839, Qualified Adoption Expenses, eligible taxpayers must include with their 2010 tax returns one or more adoption-related documents, detailed in the guidance issued today.

The documentation requirements, designed to ensure that taxpayers properly claim the credit, mean that taxpayers claiming the credit will have to file paper tax returns. Normally, it takes six to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. The IRS encourages taxpayers to use direct deposit to speed their refund.

Taxpayers claiming the credit will still be able to use Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.


5 Tax Facts about Summertime Child Care Expenses

Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation. There are often possible tax deductions that can be taken advantge of for parents who put their children into some form of supervised care. If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit of up to up to 35 percent of qualifying expenses of $3,000 for one child or dependent, or up to $6,000 for two or more children or dependents.


5 Tax Facts about Summertime Child Care Expenses

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the lazy days of summer and throughout the rest of the year.


Summer Child Care Expenses that are Deductible

  1. The cost of day camp can count as an expense towards the child and dependent care credit.
  2. Expenses for overnight camps do not qualify.
  3. If your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
  4. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
  5. 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.

Regardless of whether you paid for after-class child care during the school year or a week of day camp during summer break, you can apply the costs to the child and dependent care tax credit and use it to cut your tax bill at filing time. The child and dependent care tax credit is available to help offset the costs of providing care for children under age 13 while the child’s parents are working. If you work from home and you pay someone to watch your child so that you can get your work done, those expenses may qualify for the credit. Day camp expenses may also qualify for the credit, even if the camp is a “specialty camp,” such as a sports camp or a computer camp.


Almost everything that you bought in order to send your kid to camp is non-deductible. That includes:

  • Sports equipment. It’s personal in nature and not deductible, even if it’s required.
  • Clothing. Again, it’s personal in nature even if specifically required. And yes, even if those are clothes that your child would never, ever wear outside of camp.
  • Fans and furniture for overnight camp. Still, personal in nature and not deductible.

Expenses involved in simply getting ready for camp are deductible. That includes:

  • Physicals. The cost of a physical or well exam is deductible; you do not have to be sick in order for the visit to be deductible.
  • Shots. Vaccines and immunizations are considered preventative care and are deductible.
  • Fees for doctors. Most doctors charge a fee to complete forms for camp now. If those are part of your medical care, they are deductible.

Make sure you save receipts for camp and ask for the camp’s taxpayer identification number. You’ll need that number and the camp address to put on your tax return as substantiation of the expenses for the dependent care tax credit. Save the receipts as back up. For the workplace FSA, you need the camp address and a receipt or a signature of the camp director.

For more information, including rules for claiming this credit for your spouse or a dependent age 13 or over who is not able to care for himself or herself, check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available below or by calling 800-TAX-FORM (800-829-3676).


Additional IRS Links on Deducting Summer Camp Expenses on Tax Return:

IRS Publication 503, Child and Dependent Care Expenses

YouTube Videos on Deducting Summer Camp Expenses on Tax Return:

Summer Day Camp Expenses – English  | Spanish    | ASL  

Failure to Pay Child Support, Federal Non–Tax and State Income Tax Obligations

The Department of Treasury’s Financial Management Service (FMS), which issues IRS tax refunds, has been authorized by Congress to conduct the Treasury Offset Program.

Your refund or overpayment may be reduced by BFS and offset to pay:

  • Past-due child support;
  • Federal agency non-tax debts;
  • State income tax obligations; or
  • Certain unemployment compensation debts owed to a state. (Generally, these are debts for (1) compensation that was paid due to fraud, or (2) for contributions owing to a state fund that were not paid due to fraud).


Failure to Pay Child Support, Federal Non–Tax and State Income Tax Obligations

The Treasury Offset Program is a centralized offset program, administered by the Bureau of the Fiscal Service’s Debt Management Services (DMS), to collect delinquent debts owed to federal agencies and states (including past-due child support), in accordance with 26 U.S.C. § 6402(d) (collection of debts owed to federal agencies), 31 U.S.C. § 3720A (reduction of tax refund by amount of the debts), and other applicable laws.


Contacting FMS

You can contact the agency with which you have a debt, to determine if your debt was submitted for a tax refund offset. If your debt was submitted for offset, FMS will take as much of your refund as is needed to pay off the debt and send it to the agency you owe. Any portion of your refund remaining after offset will be issued in a check to you or direct deposited for you.

FMS will send you a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. FMS will notify the IRS of the amount taken from your refund. Contact the agency shown on the notice if you believe you do not owe the debt or you are disputing the amount taken from your refund. If a notice is not received contact 800–304–3107 or TDD 866–297–0517. The available hours are Monday through Friday 7:30AM to 5:00PM CT. Spanish speaking assistors are available Monday through Friday 12:30PM to 5:00PM CT. Contact the IRS only if your original refund amount shown on the FMS offset notice differs from the refund amount shown on your tax return.

If you filed a joint return and you’re not responsible for the debt, but you are entitled to a portion of the refund you may request your portion of the refund by filing Form 8379 (PDF), Injured Spouse Allocation. Attach Form 8379 to your original Form 1040 (PDF), Form 1040A (PDF), or Form 1040EZ (PDF) or file it by itself after you are notified of an offset. If you file a Form 8379 with your return, write “INJURED SPOUSE” at the top left corner of the Form 1040, 1040A, or 1040EZ. IRS will process your allocation request before an offset occurs. If you file Form 8379 with your original return, it may take 11 weeks for Electronic Filed returns or up to 14 weeks from the date of filing if you file a paper return, to process your return.


Filing Form 8379

If you are filing Form 8379 by itself, it must show both spouses’ social security numbers in the same order as they appeared on your income tax return. You, the “injured” spouse, must sign the form. Follow the instructions on Form 8379 carefully and be sure to attach the required forms to avoid delays. Do not attach the previously filed Form 1040 to the Form 8379. Send Form 8379 to the Service Center where you filed your original return. Allow at least 8 weeks for IRS to process your allocation request. We will compute the injured spouse’s share of the joint return for you. If you lived in a community property state during the tax year, we will divide the joint refund based upon state law. For additional information, FMS can be reached at 800–304–3107.