Child Tax Credit
The US government provides a tax credit that allows parents to reduce their federal income taxes up to $1000 for each qualifying child younger than 17 years old, which can help to offset the cost of care. Your tax preparer can determine the actual amount of the credit using Internal Revenue Service guidelines, Publication 972 and Schedule 8812. To qualify for the credit, the son or daughter must be younger than 17 years old, with a relationship to the parent/tax filer as a son, daughter, step child, foster child, brother, sister, stepbrother, stepsister, or legally adopted child. The dependent cannot provide more than half of his or her support, and parents must claim the dependent on their federal tax return to qualify. The dependent must be a U.S. citizen, U.S. national or U.S. resident alien, and must have lived with the parent filing the federal tax return for more than half of the tax year. See the link below for more information on this vital tax credit.
Child And Dependent Care Tax Credit
If you have paid someone to take care of your kids or another dependent so that you could work, look for work, go to school, or because the dependent is disabled, you may be able to claim this tax credit. It can be worth between 24% and 35% of the amount you paid for care, depending on your income. That percentage is taken from up to $3000 of expenses per dependent. You should have a qualified tax preparer calculate the actual amount of the credit. The bad news: This credit is not refundable, so it is worth nothing if you don’t owe income tax.
Earned Income Tax Credit
Low to moderate-income working individuals and couples, especially those with children, can apply for the Earned Income Tax Credit, also known as the Earned Income Credit. Your tax preparer will calculate the actual amount, which will depend on your income and number of children, whether each child meets the relationship, age, and shared residency requirements set out in Internal Revenue Service Publication 596.
Military Family Support
Military parents can obtain childcare or childcare fee assistance through Child Care Aware of America in partnership with the U.S. Department of Defense and the U.S. Military. Eligibility requirements will depend on your branch of the military where the parent serves. A resource link called Military Family Support is included below through which parents serving in the Navy, Army, Air Force, or Marine Corps can find out more about eligibility for support.
Financially stressed parents who need child care to give them time to work can tap many resources to meet that need. The federally funded Child Care Aware/National Association Of Child Care Resource And Referral Agencies is an umbrella entity that can help connect parents to local childcare providers and assistance agencies. State agencies administer most of these programs, and the requirements and services offered will vary from state to state, so contact your local Child Care Assistance Office to get up to date on what’s available in your state. The US government also offers significant tax breaks to help offset the cost of care. Consult your tax preparer for more information.
Trying to raise children and earn a living at the same time can be an enormous burden, especially for single parents, parents with limited income, multiple jobs, or both, or parents who are working and trying to improve their educational level at the same time. If you’re in one of these categories, you and your children deserve any help you can get. Help is out there, and it’s worth the effort it takes to find it!