Child Care Tax Deduction

Authored by Michael Grisso in Parenting, Taxes
Published on 12-02-2008

The stress of working throughout the day only to feel like you are paying for child care gets extremely frustrating after awhile. It takes the place of money that can be put towards other bills, enjoying your family, or simply sitting in the bank. However, many families overlook the benefits of child care tax deduction every year. We are writing you today to make sure this never happens again.

Understanding the Rules

Before you get excited about this extra money, you have to take a look at the stipulations. If you are going to claim a child care tax deduction, the first thing to remember is your child must not be older than 12 years of age. It is the definite cut-off point for children who do not have medical issues or specific disorders. Even if there are exceptions, it will fall into the adult child category which is a whole other article.

If you are married then the next issue will not pertain to you. However, if you are divorced, never been married, and have children, then this is an important paragraph. Claiming a child care tax deduction in this case means that you support your child over half the time. This goes for everything, not just child care. As long as you do then the credit will be yours and not the non-custodial parent.

Many times you will find non-custodial parents try to claim a child care tax deduction, but this is unlawful and they could be prosecuted by you or the IRS. In most cases when this happens the custodial parent ends up having to wait while an investigation is opened to find out which parent deserves the credit if both parties apply for it. You can beat this upfront if you get divorced by adding it into the decree.

Keeping Away from Possible Loopholes

It is understandable when you file taxes that everyone is hoping for that big return. Many times we tend to overlook the laws in hopes of gaining a few extra dollars on the backend. Unfortunately this will only create more problems in the long run, so make sure you stay away from deceitful thinking. In the end you will be quite surprised at the extra money you can earn by sticking with what the IRS gives you.

One great example of this is people trying to say they have a child care provider, but a sibling is the one they pay. While this may be true, the government will not allow such a insertion into your tax totals. Granted they will not catch it for quite some time, but the chargebacks can be a back breaker. Don’t worry though, you normally have to state the provider’s name, address, EIN number for a company or SS number for an individual.

Looking for Other Benefits

While child care tax deduction can be a great benefit for those who can utilize it, there are other tax advantages for children as well. It does not matter if you are claiming an EIC (earned income tax) or a simple CTC (child tax credit) because all of them are available. However at the end of the day the best thing to do is get a little feedback from a tax agent. They will be able to give you all the particulars on what you can and cannot do.


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