Understanding the Child & Dependent Care Tax Credit

Childcare is perhaps the steepest monthly expense many families can not shy away from. Parents or custodians are left with no choice than to pay for daycare for their infants or disabled adults under their care. However, families who are struggling to keep up with this ever-increasing bill can get a bit of respite from the IRS according to a recent post by the National Tax Reports. The post sheds light on the child and dependent care tax credit and how taxpayers can take advantage of this credit to cover the cost of their childcare.

The Child and Dependent Care Credit can cover a percentage of daycare costs up to a maximum of $3,000 for one dependent and it is capped at $6,000 for two or more dependents. This percentage can range from 20% to 35% of the taxpayer’s adjusted gross income. National Tax Report recommends using a free dependent online calculator to quickly estimate your credit amount. The online software will only ask simple questions about your family so as to ascertain who qualifies as a dependent on your tax return to help you get the biggest tax return.

There are just a few basic requirements to be met in order to qualify for the child and dependent care tax credit. First off, taxpayers must have a dependent child less than the age of 13 or an older child who is physically or mentally unable to care for himself due to disability. The purpose of paying child care for these dependents must be to allow both parents to work or get a job or attend school on a full-time basis. It is also expected that both parents must have earned income either from a job or through self-employment. The only exception to this is if one of the parents is disabled and incapable of caring for another person.

There are also rules concerning daycare. The person providing the daycare must not be listed as a dependent of the taxpayer. Summer day camps qualify as providers while overnight camps do not qualify. This is because the IRS does not think an overnight camp as a form of work-related expense.

For more information about the Child and Dependent Care Credit, please visit, https://nationaltaxreports.com/eligible-for-child-dependent-care-tax-credit/

New Child Tax Credit Calculator

Families with children under the age of 17 will find a new guide on tax blog, Internet Tax Connection very resourceful. The guide sheds more light into one of the most valuable tax credits available to Americans, the Child Tax Credit. Readers will found out how much the child tax credit is worth and exactly how much they can claim using a child tax calculator.

Recent changes to the Tax Cuts and Jobs Act (TCJA) have seen the child tax credit now become a refundable tax credit up to a maximum amount of $1,400. The income limits have also been increased and more families in America with qualifying children now have the chance to claim the credit on the new 1040 tax form. The child credit can help families reduce their Federal tax bill by up to $2,000 for every qualifying child.

Families looking forward to take advantage of the child tax credit must have at least a child below the age of 17 at the end of the tax year. The child must also be a direct descendent of the filer, which goes all the way to grandchildren and adopted children. The other criteria are;

– More than half of the child’s financial support must come from the taxpayer.

– The child must be claimed as a dependent and each child can only be claimed as a dependent on a single tax return.

– The child must be a US citizen or a US resident alien.

– The child must have lived with the taxpayer for more than half the tax year.

Using a child tax credit calculator can help determine exactly how much can be claimed with the child tax credit, the additional child tax credit and the child dependent care tax credit. By following simple instructions and providing some basic personal and financial information, taxpayers will find out how much they can potentially claim in a matter of minutes.

For more information about the child tax credit and how to use the child tax credit calculator, please visit, https://internettaxconnection.com/try-the-new-child-tax-credit-calculator/

Child Tax Credit Calculator 2019 Launched

The launch of Child Tax Credit Calculator has ensured that parents with kids under the age of 17 can make the most out of the benefits they can get from child tax credit with ease.

Child credit is known to reduce Federal Tax bill by up to $2,000 for every eligible child. The new Tax Cuts and Jobs Act has meant that most American families have the opportunity to claim this credit. However, the rules are strict, and it can be a tedious process.

That’s where the Child Tax Credit Calculator comes into the picture. It helps parents stay on top of calculations for credits they can claim in the year. It’s interesting to note that with changes in rules in December 2017, the credit is now refundable.

Users get information about guidelines to know if their child is eligible for tax credits. They also know how much credit they are eligible for. All they have to do is answer a few questions and they can be guided through a step by step process that leads to substantial benefits.

About Child Tax Credit Calculator

This calculator has been designed to help parents figure out how much child tax credit they can claim in a year simply and conveniently.

Media Contacts:

Website: https://internettaxconnection.com/try-the-new-child-tax-credit-calculator/

7 Child Tax Credit Requirements Explained

child tax creditA tax credit to assist families with offsetting tax liabilities is the Child Tax Credit. The credit is capped at $1,000 per qualifying child. Determining eligibility is done automatically if you file your tax return electronically. There are seven pieces of criteria that you must meet before being able to claim the credit.

The steps to determine eligibility for the Child Tax Credit are:

  1. Age Test

Qualifying children must be age 16 or younger on December 31 of any given tax year.

  1. Relationship Test

In terms of relationship, the child to adult relationship must be one of the following:

  • A biological child
  • A stepchild
  • An adopted child (or in the process of adoption with proper paperwork)
  • A foster child placed by a court or proper authority agency.
  • Step-siblings that you care for
  • Nieces and nephews in your care
  • Grandchildren in your care
  1. Support Test

Parents and legal guardians must provide more than half of a child’s financial needs for an entire tax year to qualify.

  1. Dependent Test

To be able to qualify as a dependent, the relationship test must first be passed. The child cannot be over age 18, unless the child is still in school. If your child is still in school, they may qualify as a dependent until their 23rd birthday and must be a student, full-time, at least five months of the year. The child also qualifies if he or she has a permanent disability and age does not apply with permanent disability cases.

The child must also reside with you for more than half of the year and not have paid half or more of their own financial needs.

  1. Citizenship Test

Qualifying children must be U.S. citizens. They also qualify if they are a documented U.S. resident alien or U.S. national. U.S. national status is in regards to a person born in American Samoa or Commonwealth of the Northern Mariana Islands.

  1. Residence Test

A child must live with you for more than half of a tax year. If a child was born in or passed away in a tax year, they qualify as a living with you for the whole tax year.

Some special circumstances, such as military deployment/service, juvenile incarceration, and medical reasons count as time living with you. Also qualifying are business-related absences, school exceptions and vacation-related exceptions.

For separated parents with custody agreements, additional exceptions apply. These exceptions are addressed on lines 6c and 51 of your 1040. If you file a 1040A form, it is lines 6c and 33 to pay attention to.

  1. Family Income Test

If your adjusted gross income exceeds income thresholds, the amount of your Child Tax Credit is reduced.

The income thresholds are:

  • $55,000 for married filing separately
  • $75,000 for single, head of household, widow/widowers
  • $110,000 for married filing jointly

Reductions of $500 per $1,000 over the income threshold are in place.

Additional child tax credits are also available.