Tax credits directly reduce tax liability. You may be able to claim the child and dependent care credit if you paid expenses for the care of a qualifying individual to enable you to work or actively look for work. It even applies for expenses paid for care of qualifying individual to enable your spouse to work or actively look for work. Remember, you may not take this credit if your filing status is married filing separately. If divorced or separated, credit is available to parent, having custody of child for longer time during the year. Married taxpayer must file joint return to avail the credit. A qualifying individual can be your child who is under age of 13. A qualifying individual can also be a dependent individual or a spouse who is mentally incapable of self-care and lived with you for more than half of the year. You must provide the taxpayer identification number usually the social security number of each qualifying individual. Qualifying expenses are those incurred for care of qualifying individual to enable you to work or look for work. But remember you must reduce the expenses by the amount of any dependent care benefits provided by your employer. You must also identify all persons or organizations that provide care for your child or dependent.You must report the name, address, and taxpayer identification number (either the social security number or the employer identification number) of the care provider on your return. You can use Form W-10, Dependent Care Provider's Identification and Certification, to request this information from the care provider. If you cannot provide information regarding the care provider, you may still be eligible for the credit if you can show that you exercised due diligence in attempting to provide the required information. Remember, the care provider cannot be your spouse, the parent of your qualifying individual, your child who is under the age of 19, or a dependent for whom you or your spouse may claim an exemption on your return. Note, if you pay a provider to care for your dependent or spouse in your home, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare taxes and pay federal unemployment tax. If you qualify for the credit, complete Form 2441, Child and Dependent Care Expenses, and attach to Form 1040. If you received dependent care benefits from your employer, you must complete Part III of Form 2441. Consider checking Am I Eligible to Claim the Child and Dependent Care Credit? Interview on IRS website.
