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Dependent Care Credit

What is dependent care credit?

The dependent care credit is a type of tax credit given to parents that are working taxpayers for unreimbursed expenses that they pay for the child or the dependent while the parent is working or looking for work. There are certain requirements for a person to meet before they would qualify to receive the dependent care credit.

If a person qualified to receive the dependent care credit for a disabled spouse on their federal tax return, when they are asked the same question on their Iowa state return, are they meaning the same person?

In the state of Iowa, when the state tax return asks for the disabled dependent information, then the person would input their disabled spouse’s information. The state of Iowa does not have a dependent care exemption, but they do allow for there to be a deduction of taxable income of up to $5000.

If a person was a stay at home parent for the year of 2009, can the parent claim the child care credit for the year 2009 if they placed their child in a daycare?

If the parent is a stay at home parent, then the parent would not be able to claim the dependent care credit unless they are working or looking for work. If the parent is married, then both parents would have to have earned income to claim the dependent care credit. If the stay at home parent had proof that they were looking for employment, then they would be able to claim the dependent care credit.

How much is child care tax credit in Illinois?

If the person that is filing for taxes paid someone to care for a child, spouse, or dependent, then they may be able to use the dependent care credit when they file their federal income tax return. The person would be able to use up to $3000 for one child and $6000 for two or more children and the credit would be figured at 35% of the qualifying expenses. The person would need to use form 2441 line 8 to figure the dependent care credit.

Can a person claim both the dependent care credit on their federal return and caregiver tax exemption on their Georgia state taxes?

In the state of Georgia, the O.C.G.A. Statute 48-7-29.2 states; “provides for a qualified care giving expense credit. This is a credit of 10 percent of the qualified care giving expenses for a qualifying family member. The credit cannot exceed $150. The requirements are as follows: 1. Qualified care giving expenses are defined as home health agency services, personal care services, personal care attendant services, homemaker services, adult day care, respite care, or health care equipment and other supplies which are determined to be medically necessary by a physician. 2. Qualified care giving expenses do not include expenses that were subtracted to arrive at Georgia net taxable income or with respect to any qualified care giving expenses for which amounts were excluded from Georgia net taxable income. 3. The care giving services must be purchased or obtained from an organization or individual not related to the taxpayer or the qualifying family member. 4. The qualifying family member must be at least age 62 or be determined disabled by the Social Security Administration. A qualifying family member is defined as the taxpayer or an individual who is related to the taxpayer by blood, marriage or adoption. 5. There is no carryover or carry-back available. 6. The credit cannot exceed the taxpayer's income tax liability.”

The person would generally not be able to claim both of the credits, so they would need to choose the credit that would benefit them the most.

The dependent care credit helps reimburse a person for dependent care so that they can continue to work and bring in money for their families. When a person is filling out their taxes and they have expenses that are associated with dependent care, then they may have questions regarding what is considered to be dependent care. When these questions arise, then the person would need to gain the answers from an Expert.
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