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Childcare Tax Breaks

by breedlove March 30, 2012

If you hired a caregiver for your dependent child (or parent) in 2011, you may be entitled to the Child or Dependent Care Tax Credit.  Qualifying expenses include wages paid to caregivers, taxes paid on those wages, fees paid to a placement agency to help you find the caregiver and any daycare or daycamp fees (overnight camps may not be included).


You can itemize up to $3,000 per dependent per year (up to a maximum of $6,000).  If you utilized a Flexible Spending Account, you'll have to deduct those funds from your total.


To qualify for the tax credit, your child(ren) must be under age 13 and you must pass the "work-related test," which means that the care expenses were necessary so that you and your spouse can work, look for work or go to school full-time. 


The expenses are itemized on Form 2441 and included with your federal income tax return, which is due April 17, 2012.  Click here for more information about tax breaks for care-related expenses.



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