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Are Child Care Expenses Tax-Deductible

Are Child Care Expenses Tax-Deductible?

If your annual income is $15,000 or higher, you can take advantage of the childcare expenses tax credit.  This tax break allows you to deduct up to $3,000 in childcare expenses.  This can include daycare, babysitter fees and even summer camp.  For two or more dependents this deduction totals $6,000.

Hudson, NH Resident Has Questions

A Hudson resident was looking for additional ways to save on her taxes.  She was surprised to hear that the money she paid for her child’s summer camp is actually tax-deductible.

Qualifications for the Child Care Deduction

To quality for this tax deduction, you must have earned income for the tax year in question.  The childcare must have taken place during a time when you or your spouse were working or looking for work and is only available for a dependent that is in your custody.  The child must be under age thirteen and the provider cannot be your spouse or a parent of the child. 

The types of expenses that qualify for this deduction include the obvious money paid to daycare, including before or after care provided for school-age children.  Any fees associated with camps, as long as the parent is using the time to work or look for work, are deductible.  If you have a housekeeper, cook or home babysitter that is also providing care for the child, this also qualifies.

When Filing Separately, Only Take the Child Care Tax Credit Once

Those parents that are divorced, separated or filing separately can only take advantage of this childcare tax credit once.  Even if the divorce settlement decrees one parent able to claim the child as a dependent, the childcare tax credit can only be taken by the parent that the child resides with the majority of the year.

The Hudson resident was pleased to hear that her child’s camp expenses would be tax-deductible and is looking forward to taking advantage of this credit this year and beyond.

Set up an appointment with Merrimack Tax Associates’ professionals to find out more about tax deductions. Call today (603) 429-2009.

Child Care, save on taxes, tax deductions