Welcome Guest. Register Now!  


Itemized Deductions Schedule-A


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 08-08-2011, 02:10 PM
Junior Member
 
Join Date: Apr 2007
Posts: 3
Child Care deduction

My wife is on unemployment and we have a 6-month-old baby. She is looking to return to work. Of course, when she finds a job we will have to begin paying for child care. We would like to know the minimum salary we can accept for her to return to work while paying for daycare that will allow us to afford our costs of living. One factor involved is how much we can deduct from our taxes for child care. What can we expect for a child care deduction? Thanks.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 08-09-2011, 02:57 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
“ We would like to know the minimum salary we can accept for her to return to work while paying for daycare that will allow us to afford our costs of living.”---> The child care credit can be up to 35 percent of your qualifying day care expenses, depending on your income, but may not to exceed $3,000 for one child, and $6,000 for two or more children. For example, if your AGI on 1040 line 38, NOT Taxable Income, is $15,000 or LESS, then your child care credit is equal to 35% of the qualifies expenses while if your AGI is between $27,000 and $29,000 , then your child care credit is29% of the qualifies expenses. Assume that you file a joint return with your spouse, and you have one child and pay $4,000 for child care expenses; you earn $16,000 and your spouse earned $8,500 and have no tax deductions, resulting in your AGI of $24,500, then your qualified expenses is $4,000. However, maximum child care expense for one dependent(child) is $3,000. so your credit percentage is 30% as your AGI is between $23,000~$25,000 as shown on Form 2441; so, $900 child credit is allowed; $3,000( NOT $4,000)*30%=$900. As you can see, you and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment.
Please visit the IRS Website here: Ten Things to Know About the Child and Dependent Care Credit
http://www.irs.gov/pub/irs-pdf/f2441.pdf
One factor involved is how much we can deduct from our taxes for child care. What can we expect for a child care deduction?”--->As said above it depends on your AGI, NOT Taxable income. For 2011, you may use up to $3,000 of expenses paid in a year for one qualifying individual As long as your AGI level is $15,000 or less, then your child care credit is 35%; So,$1,050; $3,000*35%=$1,050 for the child; if you pay $2,000 then your child care credit is $700;35%*$2,000=$700. you report the credit on 1040 line 48. As long as a household pays for child care for their children or disabled adult dependents, they may qualify for a tax credit. Tax credits differ from tax deductions in that credits directly reduce the taxes you owe, while deductions reduce the amount of income that is taxable. Parents who are "married, filing jointly" can only claim the credit if both parents are working.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Ten Things to Know About the Child and Dependent Care Credit Samatg For 2010 0 03-07-2011 04:54 PM
Is Babysitting considered Child Care?! dechaine10 Income 1 02-03-2011 01:59 PM
Top Ten Facts About the Child and Dependent Care Credit Samatg For 2009 0 03-09-2010 01:07 AM
Top Ten Facts About the Child and Dependent Care Credit Samatg Tax Credit 0 03-10-2009 12:49 PM
Claiming the Child and Dependent Care Credit Samatg General 0 03-15-2007 07:50 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.