IRS Special Edition Tax Tip 2014-16: Get Credit for Child and Dependent Care This Summer

IRS Special Edition Tax Tip 2014-16: Get Credit for Child and Dependent Care This Summer

Announcement from the I.R.S. June 11, 2014 (link above)

Now that the kiddos are out of school, there is that little relief that you no longer have to wait in long lines to drop the children off, but they will probably need oversight while you or your spouse work, or look for work.

 Having to pay day care during the off-school months can hit an already tight budget hard. It will be a big help to at least receive tax credits for amounts paid during the 2014 tax year.

Summer daycare for dependents, which counts children under 13 years old, and any other Qualifying Dependent, who is your dependent or would be your dependent. 

• Perhaps your elderly father lives with you. You house him over 6 months of the year, you help him buy and attain medicine, take him to the doctor, help him with hygiene, etc. He would qualify as your dependent, except he receives gross income of more than $3,900.00; not enough to survive on, but too much to be rated as a dependent. If you have to take him to daycare, or hire someone to come to your home to watch him, those payments may be eligible for the Child & Dependent Care Credit.

Summer Day Camps and Tax Credits by danielstoica.com

Example 1: Say you have a 5 year old son, and a 16 year old son. You decide to pay your son to watch his younger brother during the summer, while you work, and your deadbeat husband "looks for work." This may be the best arrangement you can afford, but you would not be able to claim the Child & Dependent Care for those payments.

Example 2: Your deadbeat husband finally got run over by a reindeer, and lived, but he is just a vegetable. You have two dependent children, ages 4 and 7. Your payments made to a Qualifying Provider (who must give a SSN/or an EIN) for care while you work are probably eligible for the credit, because your Spouse is incapable of caring for the children.

Example 3: In order to take up the slack of having to pay for Child Care all summer, you enroll them in camp for two weeks solid, thinking that you can deduct the cost of the "Over Night" Camp as Child and/or Dependent Care. You would not be eligible for the credit in this case.

IRS.gov Child & Dependent Care Expenses - YouTube

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If you are counting on the Child and Dependent Care Credit for your 2014 taxes, make sure to follow all of the rules. Keep good records, and reciepts for all monies paid out. 

Good Luck, Happy Summer, and don't forget to sign up for Summer Reading Programs -2014.

Free File Forms - 2008 Tax Year

Good morning Taxpayers, [Happy Superbowl 43! Steelers vs Cardinals]
***Here is an update on the new Free File Forms available from the IRS Free File link.

Go to www.irs.gov, in the Search Box, type Free File. You will be directed to a split page. The top portion of the page gives income limitations for Free File using approved Software. The IRS gives two options with Free File with Software; 1). You choose the Company, 2). The IRS will choose for you after you answer a couple of questions. http://www.irs.gov/efile/article/0,,id=118986,00.html

The next option on Free File using Software is that you choose your own. There are different reasons to choose, but find the one who best suits your needs without charging too much.

On the Bottom half of this page, Taxpayers are given the option of choosing their own forms; 1040, 1040A, or 1040EZ.

***** No income limits for using these forms. Some Forms for the more complicated returns will not be available until March of 2009. This is when Congress is done with 2008 Tax Law, and it is final.

***** Five Star rating for any Dependent who needs to file an income tax return. Remember Parents and Guardians; if you claim a dependent on your Tax Return who has earnings, they are required to File a Tax Return. After working for years at one of the big name tax firms, I can tell you the prices charged for a Dependent 1040EZ is too much. By getting your youngster started with Free Forms, this will give them a better understanding of their 'tax life". Oh yeah; It is completely free to file electronically. I have run into a glitch on the start-up, but on Monday I will be in touch with the IRS to find out Whatz up.

My tax return is more complicated because I legally take every penny possible, and I was up to 8 forms & worksheets last night when I realized I could not locate the place to enter W-2, 1099, 1099R [incoming money] forms. Again, I probably missed something on the sign in, but it should not be so hard to locate these areas of entry. Follow-up Monday night if I can get off of Eternal Hold.

~ Software - TaxSlayer is still my favorite. They are user friendly, provide links to information to what you are doing without charge. Under certain income limits; it is Free Fed & Free State = 9.95 E-File.

Many have used the same company for years. If you have had no problems and you are happy with the ease of use; don't change. Keep in mind when you purchase the Software in the stores, you are paying a lot more than 9.95, or 14.95. As they say, if you don't know how to use it correctly it will be problems without measure and you can be barred from the IRS by doing your own taxes.

Records, Records, Records. You must have them compiled before you File!

If you use a tax professional, do not put them in the position of "guessing" close to your numbers. This year more than ever, your Tax "people" will be held accountable for erroneous numbers. Do not let any Tax 'people' convince you to "use a Dependent" that you cannot prove the dependency.

I heard one guy in a school for a certain Large name firm say, "they told us no one ever goes to jail for that..."

Try this, go to the Department of Justice website, search Tax Firms & Preparers. Perhaps print out the 20 - 30 pages of firms that have been closed, the tax pros that have been fined and their punishments.