It is important for you to know the tax credits that may apply to you. SKS Tax Service can assist you to find those credits you may utilize on your federal income tax form to increase the tax refund you receive or decrease the amount you have to pay.
Child Tax Credit
This credit is for people who have a qualifying child as defined below. The maximum amount you can claim for the credit is $1,000 for each qualifying child.
A qualifying child for purposes of the child tax credit is a child who:
- Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendent or any of them (for example; your grandchild, niece, or nephew)
- Was under age 17 at the end of 2014
- Did not provide over half of his or her own support for 2014
- Is claimed as a dependent on your return
- Does not file a joint return for the year (or files only as a claim for a refund)
- Lived with you for more than half of 2014
- Was a U.S. citizen, U.S. national, or U.S. resident alien.
Limits on the Credit
Your child tax credit may be reduced if either rule applies.
- If the amount of your tax liability is zero, you cannot take this credit because there is no tax to reduce.
- Your modified adjusted gross income is above the amount shown below for your filing status.
- Married filing jointly – $110,000.00
- Single, head of household, or qualifying widow(er) – $75,000.00
- Married filing separately – $55,000.00
Additional Child Tax Credit
This credit is for certain individuals who get less than the full amount of the child tax credit. The additional child tax credit may give you a refund even if you do not owe any tax.
Child and Dependent Care Credit
You may be able to claim the Child and Dependent Care Credit on your federal income tax return if you paid someone to care for your child, spouse, or dependent last year. Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses.
- The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 13 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
- The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.
- 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. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.
- The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your tax return.
- Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
- The qualifying person must have lived with you for more than half of the year. There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents. See Publication 503, Child and Dependent Care Expenses.
- The credit can be up to 35% of your qualifying expenses, depending upon your adjusted gross income.
- You may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
- The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.
- If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer and may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. See Publication 926, Household Employer’s Tax Guide.
Your child and dependent care expenses must be for the care of one or more qualifying persons. A qualifying person is:
- Your qualifying child who is your dependent and who was under age 13 when the care was provided.
- Your spouse who was physically or mentally not able to care for himself or herself and lived with you for more than half the year, or
- A person who was physically or mentally not able to care for himself or herself, lived with you for more than half the year, and either:
- Was your dependent, or
- Would have been your dependent except that:
- He or she received gross income of $3,900 or more,
- He or she filed a joint return, or
- You or your spouse, if filing jointly, could be claimed as a dependent on someone else’s return.
Child of divorced or separated parents or parents living apart.
Even if you cannot claim your child as a dependent, he or she is treated as your qualifying person if:
- The child was under age 13 or was physically or mentally not able to care for himself or herself,
- The child received over half of his or her support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last six months of the calendar year,
- The child was in the custody of one or both parents for more than half the year, and
- You were the child’s custodial parent (the parent with whom the child lived for the greater part of 2014).
The non custodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents.