Holding those little ones in your arms and slowly guiding them through the path of life, is surely one of the
most joyous and fulfilling experience of a lifetime. But there is no denying that it can be hard on your
pocketbook. Catherine, a mother of two children aged 7 and 10, experiences this dichotomy between pleasure of
child rearing and its pinching effect on the pocketbook. So, to alleviate the effect, you must utilize the option of
child and dependent care tax credits to the best of your abilities.

This week we will discuss about child and dependent care tax credits and filing Form 2441. If you have a child
under the age of 13, or an incapacitated spouse or parent, you may be able to take a dependent care credit on
your individual tax return.

For 2023 the maximum allowed credit with one child is $4,000. With multiple dependents, the maximum
allowed credit is $8,000 for 2 or more dependents. Each year the amount of the credit may change. Your tax
professional will know that limit.

To claim this credit, you will need the name, address, and taxpayer identification number of the dependent care
provider. The money paid to the provider is income to them that must be reported. You will also need receipts
for the payments made to the dependent care provider, to give to your tax preparer. There are certain rules that
must be considered to find out if your income level is too high to take this credit, and your tax preparer will be
able to help you figure this out.

Some employers offer pre-tax dependent care benefits. If you have dependents that fall into these categories,
usually it will be advantageous to use your employer’s pre-tax dependent care plan. It will save you taxes to use
an employer’s plan, but it will also limit the dependent care credit you are eligible for. Your accountant can help
with this decision.

Here are 10 facts from the IRS about this important Dependent Care tax credit:

1. You may qualify for the credit if you paid someone to care for your child, dependent or spouse last year.

2. The care you paid for must have been necessary, so you could work or look for work, or attend school. This
also applies to your spouse if you are married and filing jointly.

3. The care must have been for ‘qualifying persons.’ A qualifying person can be your child under age 13. Such
qualifying person may also be a spouse or dependent who is physically or mentally incapable of self-care,
regardless of age. They must also have lived with you for more than half the year.

4. You, and your spouse if you file jointly, must have earned income, such as wages from a job. Special rules
apply to a spouse who is a student or disabled.

5. The payments for care can’t go to your spouse, the parent of your qualifying person or to someone you can
claim as a dependent on your return. Care payments also can’t go to your child under the age of 19, even if
the child isn’t your dependent.

6. The credit is worth up to 50 percent (%) of the qualifying costs for care, depending on your income. That
credit is limited, based on the number of dependents, your childcare expenses and your taxable income.

7. Overnight camp or summer school tutoring costs do not qualify. You also cannot count the cost of care
given by a person you can claim as your dependent. Special rules apply if you get dependent care benefits
from your employer. For more see Form 2441, Child and Dependent Care Expenses.

8. You must include the Social Security number of each qualifying person to claim the credit. You must report
this information when you claim the credit on your tax return.

9. You must include the name, address and identifying number of your care provider to claim the credit. This
is usually the Social Security number of an individual or the Employer Identification Number of a business.
10. Remember that this credit is not just a summer tax benefit. You may be able to claim it for care you pay for
throughout the year. To claim the credit, attach Form 2441 to your tax return.

Be sure to consider the following, when preparing the Form 2441 for Dependent Care Tax Credits. Here
are some points to remember:

● The maximum amount of expenses allowed for one dependent and multiple dependents is limited each year.
Ask Azmoneyguy or your tax professional for the amounts.

● You need the name, address, and taxpayer identification number of the dependent care provider to complete
the Form 2441.

● If your employer offers dependent care reimbursement, that will reduce the credit amount that is available to
you, dollar-for-dollar.

● This credit helps reduce regular income tax but may not reduce alternative minimum tax (be sure to see
Azmoneyguy or your tax professional for specifics).

Call today, don’t delay! See how this affects you. We can be reached at 602-264-9331 and on all social media under azmoneyguy.

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