Child Care Tax Credit Question?

Question

I'm considering filing for the child care tax credit. i don't have a child care benefit plan thru work. i would be claiming $1200 for 2006. is it worth it? what are the set backs if any? what have other peoples' experiences been?

Answer 1

It is worth claiming the Dependent Care Credit (by attaching Form 2441 to your tax return) if you pay for child care so that you can work. If you are married, both you and your spouse need to work (or go to school full-time, or be disabled) to get the credit.

You just need the name, address, and tax id number of the daycare provider. They are required to give this to you.

You will get a reduction in taxes equal to between 20% and 35% of the amount of child care you paid, so in your case between $240 and $420.

If you do not owe taxes you will get no benefit from the credit, so there is no point adding Form 2441 to your return.

Answer 2

Most people claim roughly $3,600 a year for one child. That's an average. It always worth filing for, even if it isn't that much. Turbo Tax has free software online that you can use instead of buying the expensive ones in the store that make filing the child care tax credit easy.

Answer 3

If he's claiming his baby on his taxes, then you definately shouldn't signup for something at artwork. at the start, the youngster care price is going with the youngster. when you consider which you're actually not claiming the youngster, you will get NO income in case you attempt to do a based Day Care as pre-tax because it's going to be further returned on your income on the top of the year.

Answer 4

If you have expenses that qualify, and you have any tax liability for the year, then sure, it's worth it to file for the credit. It's money in your pocket.

If you don't have any tax liability in the first place, then no, it won't do anything for you. It can only take your tax to zero. If it's already zero, then there's no benefit.