The Federal Tax Credits Blog

Posts Tagged ‘dependent care tax credit’

Question: Obamas plans in the State of the Union speech?

I know that he talked about More Funding for Programs to Care for the Elderly,Expanding Child and Dependent Care Tax Credit for Middle Class Families,rducing student loans and limiting the amout of money candidates can use for their campain…what else?

Answer: he talked about how the twilight series were the best movies ever

Fitch Rates New York City’s $130MM GO Bonds ‘AA’; Outlook Stable

Fitch Ratings has assigned a rating of ‘AA’ to the following New York City general obligation bonds:

Health Care reform and its affects on individual and group health insurance coverage.

Question: I have a child who I would like to claim on my taxes. How much credit will I get for him in 2010? Is there?

a website to show me this? I know in 2009, it was $3650.

Also, my wife doesn’t work. She only takes care of the baby. Can I claim her as a dependent?

Answer: The answer to some of your questions depends on income levels.

With respect to your child, you can claim the baby as a dependent. For 2010, the amount is $3650. In addition there is a child tax credit, which could be worth as much as $1000.

You cannot claim your wife as a dependent. However, you get to file a joint return, which is far better than filing single, since your spouse doesn’t work. (Of course, you don’t have the option to file single, since you are married.)

7 Tax Tips for Your 2010 Return (The Tax Guy)

These breaks could boost your refund — or reduce what you owe.

Obamacare Court Ruling Headlines

Question: Do I qualify for th child tax credit?

Here is my situation.

I’m a single dad and it is not my year to claim my son as a dependent.

On the W-4 worksheet on line F it states :
Enter 1 if you have at least $1,500 of child or dependent care expenses for which you plan to claim credit.

I plan on claiming child care credit, because I have spent way more than $ 1,500 in day care and private school.

Then there is line G, the child tax credit. It States:
If your total income will be less than $57,000 (which it is) enter 2 for each eligible child.

Is my son an eligible the child tax credit for me, even though I will not be entering him as a dependent on line d of the W-4 worksheet this year?

Answer: First of all private school doesn’t qualify for the child care credit, see education on page 6 pub 503. Only child care cost that enable you to work qualify. So no babysitting so you can go out on a date or any other reason. See pub 503 p5. http://www.irs.gov/pub/irs-pdf/p503.pdf

You don’t state if you child lives with you or not. This could go 2 different ways.
See pub 501 p 11 special rules for divorced or separated parents. http://www.irs.gov/pub/irs-pdf/p501.pdf

Only the custodial parent can claim the Child Care Credit, Earned Income Credit, and Head of Household filing status. These benefits require that the child live with you. The non custodial parent can claim the Dependency exemption and the child tax credit if the custodial parent signs Form 8332 or it says so in the divorce decree (p 13).

While I think its great that you want to fill out your w4 so that too much tax isn’t withheld, be careful that you qualify for what you think you do.

Foreclosure struggle to keep a house a home

Editor’s note: This is the first of a four-part series looking at the local impact of the foreclosure crisis.

New Dependent Rules

Question: Flexible spending (cafetieria plan) option: Good or bad?

I signed up for a dependent care FSA this year. The total amount available per calendar year is $5000.00 and I chose the whole amount. I get paid weekly, so, I have $96.15 taken out of each paycheck.

My son’s daycare is $145 per week. I know that I will use the $5000 prior to year end so am not worried about “using it or losing it”. However, I was wondering if this is a good plan and how it will affect my child tax credits when I do my tax return next year? Also want to know if this account can also be used for my son’s medical prescriptions & Dr. visits? I heard that you may not be able to if you have only a dependent care plan set up.

Do you ultimately feel the FSA is a good advantage and why?

Thanks

Answer: You cannot use FSA-Dependant Daycare for Unreimbursed Medical Expenses (UME). However, if your employer offers an FSA for daycare, they probably also offer a similar program for UME (either a cafeteria plan or a Health Savings Acct).

This program will not effect your child tax credit, but it will effect your Dependant Daycare tax credit (you probably lost it). But the benefits you see from using the 125 plan, usually far outweigh the Dependant Daycare tax credit. Because you did the 125 plan, your tax refund will be smaller, however, you probably saved more than that throughout the year.

With the Daycare tax credit, you probably would have saved $600-$1050 (depending on your income level, higher your income, the lower the credit). With the 125 plan, you probably saved $950-$1950 over the course of the year, higher the tax bracket, higher the savings. Even though your tax refund may be smaller, you are getting larger paychecks.

To know for sure if this is a good plan for you, I would have to know a bit more information about your taxable income, but for a vast majority of taxpayers, the Cafeteria plan that you are doing is a good deal.

Queasing over Quantitative Easing, Part IV

By David Merkel. In my last post on this topic, I went over the orthodox and unorthodox monetary policy responses to the crisis in the US. Here were the orthodox options: Read more » »

Bipartisan Meeting on Health Reform: Part 2