Housekeeping and Deposit Credit are the non-refundable tax credits available to US taxpayers. The taxpayers who care for eligible individuals qualify. The purpose of credit is to allow taxpayers (or their spouses, if married) to work well. This credit is made by 26 U.S. Code (USA) Ã, § 21, article 21 of the Internal Revenue Code (IRC).
Video Child and Dependent Care Credit
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The federal court has confirmed that the costs incurred for dependent care, such as childcare or daycare, while taxpayers are at work, are not included in deductible and non-deductible business expenses under IRC section 162 (a). As a result, single-breadwinner households with qualified individuals are favored by more than two income households with eligible individuals, as childcare costs often outweigh the additional income made in the two-breadwinner households. IRC section 21 serves to reduce this imbalance by allowing limited credit for certain costs associated with eligible care of dependents.
Maps Child and Dependent Care Credit
General eligibility requirements
The IRC section 21 uses the term "individual qualification" rather than "dependent" to refer to the type of dependent which is a concern for who will trigger credit. Eligible individuals should be one of four types:
1) Dependents under the age of thirteen for whom dependency exceptions can be claimed,
2) Dependents of all ages who share the same primary place as taxpayers and physically or mentally unable to take care of themselves,
3) Couples of all ages who share the same primary residence as taxpayers and are physically or mentally unable to take care of themselves, or
4) Certain dependent children of divorced parents.
Do taxpayers "keep households"?
The taxpayer must "keep the household" for an eligible individual (s), which means the taxpayer must provide more than half of the total cost of housekeeping. In addition, if the taxpayer is married, both the taxpayer and his spouse must earn income, unless one partner is a full-time student or physically or mentally unable to take care of themselves.
Does the dependent person have the required age and relationships?
A taxpayer may claim freedom of dependence for a dependent person under the age of thirteen if the dependent is a child of the taxpayer, siblings, siblings, half-brother, stepbrother or descendant of such an individual. Eligible children may not provide more than half of their own support and must have the same primary residence as taxpayers for more than six months of the year.
Costs that can be credited
Credible costs include not only actual physical maintenance costs but also additional "household" services such as food preparation and cleansing. Outdoors services are eligible if they involve the care of a qualified child or a disabled or dependent partner who regularly spends at least eight hours a day at a taxpayer's home. Payments to relatives are also eligible for credit unless the taxpayer claims the relief of reliance on relatives or if the relative is a child of the taxpayer and is under the age of nineteen. No credit is allowed for the cost incurred to send dependents to the camp overnight.
Number of credits/current percentage
Credit is a percentage, based on the adjusted gross income of the taxpayer, of the amount of costs associated with child labor and the treatment of the taxpayer depending on the provider. A taxpayer can generally receive credit anywhere from 20-35% of the fee against the taxpayer's federal income tax liability. The percentage applicable is inversely proportional to the adjusted gross income of the taxpayer - the higher the adjusted gross income, the lower the percentage.
The amount of credit is equal to the applicable percentage, as determined by the adjusted gross income of the taxpayer, times the eligible work costs are paid. Taxpayer with adjusted gross income of $ 15,000 or less using the prevailing highest percentage of 35%. For taxpayers with adjusted gross income of more than $ 15,000, credits are reduced by one percentage point for every $ 2,000 of adjusted gross income (or denominations) of more than $ 15,000. Percentages applicable minimum 20% are used by taxpayers with adjusted gross income greater than $ 43,000.
The maximum creditable charge available under IRC Article 21 is $ 3000 (or $ 6000, if the taxpayer household contains more than 1 dependent). In addition, this dollar amount should be deducted by the amount of the dependent treatment allowance provided by the taxpayer employer that the taxpayer is not included from their income. For married taxpayers, expenditures are limited to income earned from low-income couples. If one partner is not working, no credit is generally allowed. If a partner who is not making money physically or mentally unable to take care of himself or a permanent student for more than five months during the year, the law assumes that there is income earned. The law assumes for every month of disability or attendance at school there is an income earned of $ 250 if there is one that depends or $ 500 if there are two or more.
References
Source of the article : Wikipedia
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