Caring for Your Dependents

Many taxpayers require a little extra help when it comes to taking care of their dependents. Those who hire professional care for their disabled relatives or childcare for their children younger than 13 so they can work may be eligible to recoup their expenses through the Child and Dependent Care Credit. This tax credit is worth up to 35% of qualifying expenses incurred due to the care of a dependent while you are at work.

Who is Eligible?

Taxpayers are eligible to receive the Child and Dependent Care Credit if they have paid for professional childcare services for any child under age 13. Children over the age of 12 may be eligible if they are not capable of self-care due to a disability. You will be required to provide proof that the dependent cannot take care of himself. Also, you’ll need to prove that you were employed, or sought employment, as a result of having the childcare. In situations where your employer offers childcare benefits, you’ll need to deduct the amount from your expenses prior to claiming the credit.

Another stipulation states that the dependent must have lived in your home for more than half of the year. You are required to have provided support to the child or disabled adult in terms of their living expenses. There are times when the noncustodial parent is eligible to claim the child as a dependent, if the child’s parents are divorced. In these cases, the parent with whom the child lives with can claim the credit, even if the child isn’t that parent’s dependent.

There are certain requirements that the care provider must meet in order to be eligible for the parent to claim the credit. When filing, you’ll be asked to provide the caretaker’s name, address, company name (if a business), as well as a tax ID number which is usually their social security number or employee identification number if they work within a company. This information is filed on Form 2441 in which the Child and Dependent Care Credit is claimed.