JK Harris and Company, Creating Lifetime Clients

Mary Rivera – Enrolled Agent, JK Harris and Company, LLC

Spring is here and with spring comes, tax time!  As the deadline for filing federal income taxes quickly approaches, I would like to remind you about a credit you may not realize you qualify for – the Child and Dependent Care credit.

This credit is available to many taxpayers to help relieve the financial burden of dependent and child care.  If you qualify, the credit will reduce the amount of tax you owe when you file your federal return. Did you pay someone last year for the care of your child 13 years old or younger?  Or do you have to pay for care of a child older than 13 due to medical necessity?  Do you pay for care for a dependent or spouse?  You might qualify to claim this credit on your tax return. This credit may even apply if the care was given so that you could work or so that you could look for work.

The IRS allows you to use up to $3,000 of the expenses you paid in one year for one qualifying individual, or $6,000 for two or more qualifying individuals.  This dollar amount is reduced by the amount of dependent care benefits your employer provides (if any) and it is excluded from your income.

You must also meet the following conditions to qualify for the credit:

- Income – you must have earned income from wages, salaries, tips, other taxable employee compensation, or net earnings from self-employment

- Payee – the payments for care cannot be paid to someone claimed as your dependent on your tax return or to your child who is under 19, even if he or she is not your dependent

- Filing Status – your filing status must be single, married filing jointly, head of household or widow(er) with a dependent or dependent child

- Care – the care must have been provided for one or more persons

- Home – the qualifying person must have lived with you for more than half of 2007

Remember, there are limitations to the amount of credit you can claim on your tax return.  If you are claiming the credit, you must list the name and Social Security number or EIN of the care provider.  For more information on this credit, visit the IRS’ website at http://www.irs.gov/newsroom/article/0,,id=106189,00.html.

Mary Rivera has been an Enrolled Agent since 2004.  She has worked in the Tax Resolution field for 8 years.  She is a member of both the National Association of Enrolled Agents and the Charleston Chapter of the South Carolina Association of Enrolled Agents where she has held the office of Secretary since 2006.