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I love tax credits. They are a yummy dollar-for-dollar reduction in your taxes. It is like receiving free tax-free money. One such credit that we will be discussing is the dependent care credit.
Generally expenses for the care of children under age 13 and for qualifying relatives, such as aging parents who live with you for more than 6 months during the year and be unable to care for himself or herself, qualify for the credit if these expenses are incurred so you can work or look for a job.
So how much is this credit? The credit is worth 20% to 35% depending on your income of up to of up to $3,000 in eligible child care expenses per kid; however, the maximum credit that is allowable is on up to $6,000 of expenses if you have two or more kids.
Tax tip: if you sent your child or children to any day camps this summer, such as those for sports, computers, math, theater or just general fun, don’t forget about this tax break. The same goes for camps to help improve your child’s reading or summer skills. However, expenses for summer school, tutoring programs and overnight camps don’t qualify. Go figure.
Also, before and after school- care programs are also eligible for the credit.
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