Reduce Your Taxes with the Child Care Tax Credit

If you paid someone to care for a person in your household last year while you worked or looked for work, then you may be able to take the Child and Dependent Care Tax Credit and reduce the amount of tax owed.

Here are 12 facts you should know about this important tax credit:

1.     Child, Dependent or Spouse. You may be able to claim the credit if you paid someone to care for your child, dependent or spouse last year.

2.     Work-related Expenses. Your expenses for care must be work-related. This means that you must pay for the care so you can work or look for work. This rule also applies to your spouse if you file a joint return. Your spouse meets this rule during any month they are a full-time student. They also meet it if they’re physically or mentally incapable of self-care.

3.     Qualifying Person. The care must have been for “qualifying persons.” A qualifying person can be your child under age 13. A qualifying person can also be your spouse or dependent who lived with you for more than half the year and is physically or mentally incapable of self-care.

4.     Earned Income Required. You must have earned income, such as from wages, salaries and tips. It also includes net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month that they are a full-time student or incapable of self-care. This rule also applies to you if you file a joint return. Please call if you have any questions about what qualifies as earned income.

5.     Credit Percentage / Expense Limits.The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on the amount of your income. Your allowable expenses are limited to $3,000 if you paid for the care of one qualifying person. The limit is $6,000 if you paid for the care of two or more.

6.     Dependent Care Benefits. If your employer gives you dependent care benefits, special rules apply. For more information about these rules, please call the office.

7.     Qualifying Person’s SSN.You must include the Social Security Number of each qualifying person to claim the credit.

8.     Keep Records and Receipts. Keep all your receipts and records for when you file your tax return next year. You will need the name, address and taxpayer identification number of the care provider. You must report this information when you claim the credit.

9.     Form 2441. File Form 2441, Child and Dependent Care Expenseswith your tax return to claim the credit.

10.                        Joint Return if Married. Generally, married couples must file a joint return. You can still take the credit, however, if you are legally separated or living apart from your spouse.

11.                        Don’t overlook vacation and summer camps.Day camps are common during the summer months. Many parents pay for day camps for their children during school vacations while they work or look for work. If this applies to you, your costs may qualify for a federal tax credit that can lower your taxes.

12.                        Certain Care Does Not Qualify.You may not include the cost of certain types of care for the tax credit, including:

We at Schaumburg CPA offer a complete range of International Taxation, Tax and Consulting Services. We are here not only to understand your needs but excelling on solutions to satisfy your needs. We are staying on top of current law changes and developing new relationships on a daily basis to serve your needs. Manendra Kothari is qualified Chartered Accountant from India and qualified and licensed CPA from US.

Overnight camps or summer school tutoring costs.

Care provided by your spouse or your child who is under age 19 at the end of the year.

Care given by a person you can claim as your dependent.

Contact us :-847.524.0001

Visit us :- http://schaumburgcpa.info

Last Minute Filing Tips for 2015 Tax Returns

Are you one of the millions of Americans who hasn't filed (or even started) your taxes yet? With the April 18 tax filing deadline quickly approaching, here is some last minute tax advice for you. 

1. Stop Procrastinating. Resist the temptation to put off your taxes until the very last minute. It takes time to prepare accurate returns and additional information may be needed from you to complete your tax return. 

2. Include All Income. If you had a side job in addition to a regular job, you might have received a Form 1099-MISC. Make sure you include that income when you file your tax return because you may owe additional taxes on it. If you forget to include it you may be liable for penalties and interest on the unreported income.

3. File on Time or Request an Extension. This year's tax deadline is April 18 (April 19, in Maine and Massachusetts). If the clock runs out, you can get an automatic six-month extension, bringing the filing date to October 17, 2016. You should keep in mind; however, that filing the extension itself does not give you more time to pay any taxes due. You will still owe interest on any amount not paid by the April deadline, plus a late-payment penalty if you have not paid at least 90 percent of your total tax by that date. At SK Tax Associates, we provide range of extended services to our clients in various industries. We provide traditional accounting and tax preparation services schaumburg to individual and businesses from bookkeeping, payroll processing, sales tax compliance and annual tax returns but our focus is always to go beyond compliance and help our client thrive by providing extended range of services that are rarely offered by most CPA firms.Call the office if you need to file an extension or file for late-filing penalty relief. 

4. Don't Panic If You Can't Pay. If you can't immediately pay the taxes you owe, there are several alternatives. You can apply for an IRS installment agreement, suggesting your own monthly payment amount and due date, and getting a reduced late payment penalty rate. You also have various options for charging your balance on a credit card. There is no IRS fee for credit card payments, but processing companies generally charge a convenience fee. Electronic filers with a balance due can file early and authorize the government's financial agent to take the money directly from their checking or savings account on the April due date, with no fee. The Schaumburg bookkeeping service provider serves as per the best interest of clients. Irrespective of being a wage earner, business owner and investor, hundreds of tax returns are prepared by the Schaumburg Payroll service provider.

5. Sign and Double Check Your Return. The IRS will not process tax returns that aren't signed, so make sure that you sign and date your return. You should also double check your social security number, as well as any electronic payment or direct deposit numbers, and finally, make sure that your filing status is correct.

Manen Kothari, CPA serves in Schaumburg, Mount Prospects, Glendale Heights, Bartlett, Barrington and Chicago as well as other areas of Downers Grove, Naperville, Des Plaines, Elk Grove Village, Skokie and Addison. We are also efficient in showing you the detailed deductions that can help you to limit your tax liabilities for the next few years to come as long as we are at union with your business.

Call now: 847.524.0001

For More Information Visit:  http://schaumburgcpa.info/