Here are Some Child-Care Tax Breaks for Working Parents

When it’s tax time and working parents will be happy to know that there are several tax breaks available for them to use when they file this year. We found some of the deductions that may be of interest to you if you’re a working parent.

Child-care tax breaks for working parents for 2019

You may be allowed to use your flexible spending account to save even more along with the credit allowed for dependent care when they pay for child care. Some filers report that they used theirs to pay up to $5,000 of their expenses for their children’s day care expenses, but when it came time to file taxes, they were not able to take the child and dependent care credit for all of the extra expenses, however, the credit can be used for up to $1,000 of those extra costs.

What if I have more than one child?

Working parents who have two or more children who are under the age of 13 years, and who pay for child care while they and their spouses work or seek employment can claim the child care credit for up to $6,000 in child care expenses. This includes money paid to a nanny, babysitter or any after school or other day care programs. It also includes summer day camp programs. The total limit is $6,000 so any FSA funds used during this time will count against that. The limit, however is $5,000 so you would still be able to use as much as $1,000 or more. It’s important to note that these amounts are not based upon the number of children that you have as dependents.

Other relevant information

If you or your spouse are looking for employment it could also qualify your for more credits. Another living situation which can impact your specific tax situation is education. If either you or your spouse are registered as a full-time student, you may also qualify, even if one of you is not currently working. It can help by decreasing the overall amount of your tax liability and lower the amount that you are required to pay in or increase the amount that you get back on your tax return.

How much is the dependent care tax credit worth for 2019

For the 2018 tax year, the dependent care tax credit percentage is based upon your income. The range is between 20 to 35 percent of the eligible child care expenses that you have for one child. If you have two children, it goes up to $6,000 in child care expenses for two more more kids. If your income for 2018 was at $15,000 or less, you qualify for the 35% and it goes down all the way to 20% as your income rises and it plateaus at $43,000 in income and higher.

How much does it cut the tax liability?

This all depends on your annual income for 2018. In general, the $1,000 credit may decrease your tax liability total anywhere from $200 to up to $350. Much depends on your income level and whether or not you used for Flexible Spending Account, as well as whether you have one child or two or more. You can find out more about these credits for dependent care and child care expenses by referring to the IRS’s Publication 503 which deals with Child and Dependent Care Expense. This further breaks down the figures for the credits that are available this year for each income level.

Final thoughts

It pays to be vigilant when its time to file your taxes with the IRS. There are special situations that you need to be aware of so you can take advantage of the maximum tax credits that are available to you. Your income level, whether you have one or more children, the working status of both parents if filing jointly and and whether or not you used your flexible spending account are all factors that will affect the amount of your tax liability. If you do your own taxes, make sure that you understand which credits you’re allowed and if you’re having a professional tax service complete your forms, provide them with all relevant information that we’ve discussed here.


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