Childcare Expenses & Taxes...Plus A Helpful Worksheet

If you pay childcare expenses (including those paid for dependents that aren’t children) so you can work or go to school full-time, you may be eligible for the Child and Dependent Care Expenses Credit. This credit can reduce your tax bill dollar for dollar​.....

To qualify for the credit, you (and your spouse if married) must meet the following minimum conditions:

1. Have earned income; and
   
2. Pay someone else to care for a child under age 13 (or a dependent); and
   
3. Pay the expenses so you can work, look for work, or go to school full time
   

NOTE: There are additional restrictions that must be met. Preschool tuition and summer day camps count toward this credit. However, tuition for kindergarten and higher grades and costs of overnight summer camps DO NOT qualify for the credit.

Should you claim this credit, or use a Flexible Spending Account (FSA) at work?
This is a great question for your tax advisor. Some people can actually claim both! This happens in the case where the total of your expenses off-sets the amount set aside in your FSA (reported on your W2), and remaining expenses are applied toward the credit.

For example: if you used $2,500 from an FSA to pay for child care, and your child care costs for the year were $10,000, the credit is calculated using the $7,500 overage not used with the FSA.

Tool to help you with tracking:
We have created a worksheet to assist you with the tracking of these expenses according to the info your tax preparer would need. Click here to access this worksheet along with other helpful worksheets (the specific “Child and Dependent Care Expenses” worksheet is at the bottom of the page).

Contact us any time with questions...we’re here to help!

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