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| generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe. |
| The Child Tax Credit is an important tax credit because it may be worth as much as $1,000 depending upon your income. With the Child Tax Credit, you may be able to reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17. To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, and includes a grandchild, an adopted child, a niece or nephew. If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit. |
| Child and Dependent Care Credit |
| You may be able to claim the child and dependent care credit if you paid work-related expenses for the care of a qualifying individual. The credit is generally a percentage of the amount of work-related expenses you paid to a care provider for the care of a qualifying individual. The percentage depends on your adjusted gross income. Work-related expenses qualifying for the credit are those paid for the care of a qualifying individual to enable you to work or actively look for work. |
| Expenses are paid for the care of a qualifying individual if the primary function is to assure the individual's well-being and protection. In general, amounts paid for services outside your household qualify for the credit if the care is provided for (i) a qualifying individual who is your qualifying child under age 13 or (ii) a qualifying individual who regularly spends at least 8 hours each day in your household. |
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The total expenses that may be used to calculate
the credit are capped at $3,000 (for one qualifying individual) or at $6,000
(for two or more qualifying individuals). The dollar limits may differ
depending on the tax year in question. The expenses qualifying for the
computation of the credit must be reduced by the amount of any dependent
care benefits provided by your employer that you exclude from gross income.
In general, you can exclude up to $5,000 for dependent care benefits
received from your employer. Also, generally, the expenses claimed may not
exceed the lesser of your earned income or your spouse’s earned income. A
special rule applies if your spouse is a full-time student or incapable of
self-care.
For purposes of the child and dependent care credit, a qualifying individual is: * Your dependent qualifying child who is under age 13 when the care is provided, * Your spouse who is physically or mentally incapable of self-care and who has the same principal place of abode as you for more than half of the year, or * Your dependent who is physically or mentally incapable of self-care, and who has the same principal place of abode as you for more than half of the year. For this purpose, whether an individual is your dependent is determined without regard to the individual's gross income, whether the individual files a joint return, or whether you are a dependent of another taxpayer. |
| Copyright © 2014 [Hera's Income Tax School]. All Annual Federal Tax Refresher Course rights reserved. |
| Revised: 05/28/15 |
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