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You may be able to claim a credit on your 2009 tax return if you paid someone to take care of your dependent, who is under the age of 13 or for a spouse or dependent who was not able to care for themselves while you worked or looked for work.

The credit can be up to 35% of your expenses as defined. The maximum Dependent Care Credit for one qualifying dependent is $1,050 and for two or more qualifying dependents is $2,100. In order to qualify you must have paid the qualifying expenses so that you were able to work or able to look for work. To qualify for the credit, you must also furnish more than half of the cost of maintaining a home that is also the home of the qualifying person.

How to Determine the Amount of Credit? – $3,000 is the maximum amount of employment related expenses to which the credit may be applied for one qualifying individual and $6,000 if two or more qualifying individuals are involved. The credit is computed as a percentage as indicated in an IRS table which is based on the taxpayer’s adjusted gross income multiplied by the amount of qualified employment expenses that were paid during 2009. If you have adjusted gross income of $15,000 or less then you may be able to use the highest percentage, which is 35%. If you have adjusted gross income over $15,000 the credit is then reduced by one percentage point as defined. This tax credit is based on a percentage of the qualifying expenses.

What are the Qualifying Expenses – Qualifying expenses may include those expenses paid for household services and for the care of a qualifying individual that enabled the taxpayer to work or to look for work. Unfortunately, if a taxpayer did not find a job and had no earned income during the tax year, the taxpayer is not entitled to the credit.

Qualifying expenses may include (a)day care services for children (b)an adult daytime dependent care center and (c)cleaning services, cook, maid, babysitter, and housekeeper household services.

The following is a partial list of types of expenses that are not allowed:(a)Kindergarten or a higher grade (b) Cost of transportation for the caregiver(c)Overnight camp (d)Generally food, clothing, entertainment education and (e)Child support payments.

Payments to Relatives – Payments to a relative may qualify unless the taxpayer claims a dependency exemption for that relative, or if the relative is the taxpayer’s child and is under the age of 19.

Claiming the Credit – Generally, a married taxpayer must file a joint return to claim the credit. There are special rules for taxpayers who are not married. Also, a divorced or legally separated taxpayer having child custody, whose child is disabled or under the age of 13 is entitled to the credit even if she or he released their right to the dependency exemption for the child. In order to claim the credit a taxpayer must provide a Social Security number for each qualifying individual and Social Security number for each care provider.

Special rules exist for children of divorced or separated parents, the treatment dependent care benefits received ,filing status, prior year carryovers, etc. Please refer to IRS Publication 501 for more information. This article is not intended to be legal or accounting advice. Tax laws are complex, change constantly and each situation is unique. The reader is advised to do his or her own due diligence and consult competent professionals in these areas.

Learn more about how we can help determine if you are eligible for the Child and Dependent Care Credits and other available income tax credits and about our competitively priced paperless and internet based approach to tax preparation at affordable prices . Sandor(Sandy) E. Lenner,M.B.A.-C.P.A. has been providing accounting and business services for over 35 years and works part-time at his wife’s CPA firm