Who and how can get a tax credit with a child or a dependent? - ForumDaily
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Who and how can get a tax credit with a child or a dependent

Photo: depositphotos.com

Photo: depositphotos.com

If you are working, looking for a job or studying and you have a child or a dependent to take care of, then you can most likely use this loan, which is calculated and indicated in the 2441 form and in the 49 lines in the Form 1040, 31 in the Form 1040A, 47 in Form 1040NR.

Who is eligible for credit

Only the taxpayer, including the spouse or spouse, if they are working or looking for a job, or if both of them or one of them is a student. That is, if in the family with a child one of the spouses does not work and is not a student, then, unfortunately, regardless of the amount of child care costs, you cannot use this loan.

A student (a full-time student) is a person studying at an educational institution for at least 5 calendar months in a year, and this period should not be consecutive. That is, you are not required to study 5 for months in a row, and a total of at least 5 months in a year. In most cases, the document confirming the status of the student is the 1098 T form. Therefore, the completion of advanced training courses does not give you this status.

Looking for work is the person who eventually found it, that is, the legislator gives you the opportunity to deduct from the costs that you incurred during the job search period, but only if you were employed as a result of such a search.

If the spouses file the declaration as filing separately, then the specific situation is studied. When calculating a loan, the concept is applied that the taxpayer is not married and therefore, in order to receive a loan, he or she, besides working and / or looking for a job and / or being a student, must (a):

  • To live separately from the other spouse for 6 or more months and
  • All this time living together with the child and / or dependent and
  • Pay for half or more of the cost of maintaining the house with such co-residence.

If at least one of the above points is not observed, the taxpayer loses the right to use the loan.

A special rule applies to divorced parents. Even if the child is not listed as a dependent in the declaration, he may still be dependent for the purposes of this loan if:

The age of the child is 13 and less than the age or if the child is older, but cannot take care of itself for physical or mental reasons, and the taxpayer is the guardian of such a child. In the case of a loan, guardianship is determined by the number of nights that the child spent in the taxpayer’s house — there should be more of them than in other places. If the child has spent an equal number of nights with each of the parents, then the parent with a high income is considered a guardian. If under the terms of a divorce, one parent has the right to indicate the child as a dependent, but in fact the other parent has been the guardian of the child for a year, then the first parent cannot use the loan, only the second.

Caring for someone gives you the right to credit

The law provides for the following definition of a qualifying person:

  1. A child under the age of 13 and dependent on the taxpayer.
  2. Disabled spouse unable to take care of himself.
  3. Any disabled person who is unable to take care of himself and is dependent on the taxpayer, except for: a) a disabled person whose income is $ 4 000 and more; b) a disabled person submitting a separate declaration as a spouse or spouse; c) a disabled person or child, already listed as a dependent in the declaration of another taxpayer.
Photo: depositphotos.com

Photo: depositphotos.com

What costs give the right to credit

You must bear the real costs of caring for one or more dependents in order to work, and this care was not provided by the spouse or spouse or other dependent taxpayer, excluding the taxpayer’s child who reached 19 years of age at the end of the year and again not is dependent to the taxpayer. The reality of costs must be confirmed by appropriate payment documents and other information about who provided the services.

Например, вы регулярно оплачиваете услуги няни для своего 5-летнего сына, которые оказывает ваша 19-летняя дочь и которая уже подаёт свою отдельную декларацию или является иждивенцем у другого налогоплательщика — в этом случае затраты на ее услуги подпадают под кредит.

The legislator shares all the costs of the following:

  1. Household Services. These include cooking, cleaning, babysitting, a housekeeper, a janitor, if they were part of the necessary care for a child or a dependent. Services driver and gardener can not be included in such a list.
  2. Caring for a child and a dependent also includes the costs of day care centers for children, including a day camp, which involves special activities, such as sports.

However, you cannot include the cost of: food, accommodation and education of the child, i.e. Private school costs are not part of this loan, except for time that does not include tuition, for example, extended day care. Also, this loan does not cover the cost of a camp where children spend the night.

  1. Medical expenses can be listed as part of the itemized deduction in Schedule A of Schedule A of Form 1040 or as part of this loan. However, the same costs cannot be used twice: either for Appendix A or for the purposes of this loan.

Flexible Spending Account (FSA) and other possible benefits provided by the employer

Many employers provide special benefits to their employees and pay the costs of childcare directly or through the financing of kindergartens and camps, as well as through deductions from income before taxes on special FSA accounts. Such deductions are usually specified in the 10 section of the W-2 form or the 13 section, About Schedule K-1 form code to the 1065 form.

The advantage of such programs is that they do not fall under the coefficient gradually reducing the amount of the possible loan, which is discussed in the next section. That is, it allows you to receive a deduction from the tax of the loan amount without reducing it depending on income. Therefore, if the employer provides such a program, it is better to use it.

Loan calculation procedure

A loan for 2015 a year is charged at $ 3,000 for one child and $ 6,000 for two or more. However, if the gross income after deduction (Adjusted Gross Income) exceeds $ 15,000, then the loan amount gradually comes into effect. Detailed table:

IF your adjusted gross income is:THEN the
Over:But not over:percentage is:
$0$15,00035%
15,00017,00034%
17,00019,00033%
19,00021,00032%
21,00023,00031%
23,00025,00030%
25,00027,00029%
27,00029,00028%
29,00031,00027%
31,00033,00026%
33,00035,00025%
35,00037,00024%
37,00039,00023%
39,00041,00022%
41,00043,00021%
43,000No limit20%

For example, the AGI (38 line of the 1040 form) of your family with two children is $ 110,000, then the loan amount is calculated as follows: $ 6,000 (maximum loan for two or more children) x 20% (110,000 is greater than 40,000) = $ 1,200 - maximum amount a loan that you can claim.

Documents required for a loan

Data for each dependent: full name and SSN. Information about the service provider: name, address, SSN or EIN. The amount of costs for each dependent. Form W2 and / or Schedule K-1 (1065) in the case of a special program from the employer. All information and calculations are in the form of 2441.

Photo: depositphotos.com

Photo: depositphotos.com

Possible problems in obtaining a loan

The service provider is a private individual and refuses to give its SSN. The fact is that even private individuals - entrepreneurs can get an EIN and provide it, and not an SSN. Unfortunately, not all entrepreneurs know about this feature and therefore it can be difficult to design the 2441 form. In this case, the taxpayer has a procedure stipulated by law: a request in the form W10 is sent to the address of the service provider. If even after sending a request on the W10 form, no response is received, then the 2441 form indicates all available information and includes a statement that the provider received the request, but refused to give the necessary information. This procedure is called due diligence.

This material does not constitute written tax advice or legal advice. Any information from this material is not created for use by the taxpayer in order to avoid any sanctions imposed on the taxpayer, and also can not be the basis for consultation by third parties. Please always consult a professional service before taking any action based on the information from this material. Keep in mind that information may be outdated at the time of reading, and we do not undertake to guarantee the updating of information. Copyright www.Solven.pro. Xnumx

Original article published on the site Solven.pro and reprinted with permission of the author.

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