Daycare.com Forum
Daycare and Taxes>How Much Does Daycare Benefit Parents Taxes?
My4SunshineGirlsNY 03:41 PM 01-28-2013
If a parent pays $8,000 in daycare expenses, and makes appx. 80,000 jointly...just how much does this benefit their taxes, how much LESS taxes would they have to pay (or how much MORE of a return would they get on these figures)?
daycaremum 05:30 PM 01-28-2013
All I know is that daycare costs are a direct deduction off their income. So if they made 80 000 net, they could deduct their 8000 daycare expenses and they would only pay taxes on 72 000.
If this in incorrect, let me know.
If this in incorrect, let me know.
nanglgrl 09:22 PM 01-28-2013
Originally Posted by daycaremum:
All I know is that daycare costs are a direct deduction off their income. So if they made 80 000 net, they could deduct their 8000 daycare expenses and they would only pay taxes on 72 000.
If this in incorrect, let me know.
I'm not 100% sure but I don't think this is correct. Daycare cost can be deducted if they have their providers tax ID # or if she refuses to provide it (although that can get sticky if an audit occurred). All I know is that daycare costs are a direct deduction off their income. So if they made 80 000 net, they could deduct their 8000 daycare expenses and they would only pay taxes on 72 000.
If this in incorrect, let me know.
The child and dependent care credit has a limit of $3000 for one child and $6000 for two or more children and the actual credit is at the most 35% of that amount depending on your adjusted gross income (so the MAX credit for one child is $1050 and for two or more children it's $2100). It's not a refundable credit and only goes towards reducing taxes owed so for lower income people it can be better not to claim it as it may not benefit you and actually cost you because the preparer will charge for filing out the extra form.
There are also other qualifying factors that need to be considered.
daycaremum 07:01 AM 01-29-2013
Yes, I think I am correct. There are limits, but they are fairly high. I am in Ontario, here is a link that explains.
http://www.taxtips.ca/filing/childcarecosts.htm
http://www.taxtips.ca/filing/childcarecosts.htm
Blackcat31 07:06 AM 01-29-2013
Originally Posted by daycaremum:
Yes, I think I am correct. There are limits, but they are fairly high. I am in Ontario, here is a link that explains.
http://www.taxtips.ca/filing/childcarecosts.htm
The OP asking about this is from New York. I am thinking Canadian and U.S. taxes are quite a bit different. Yes, I think I am correct. There are limits, but they are fairly high. I am in Ontario, here is a link that explains.
http://www.taxtips.ca/filing/childcarecosts.htm
daycaremum 07:21 AM 01-29-2013
Originally Posted by Blackcat31:
The OP asking about this is from New York. I am thinking Canadian and U.S. taxes are quite a bit different.
That's what I figured was happening so I thought I would clarify where I was from. I guess we've got it pretty good for that tax deduction!!!The OP asking about this is from New York. I am thinking Canadian and U.S. taxes are quite a bit different.
TomCopeland 08:12 AM 01-29-2013
The US federal child care tax credit is limited to child care expenses of $3,000 for one child and $6,000 for two or more children. The maximum credit is 35% of this to a minimum of 20% for those making above about $40,000. So, the family making $80,000 would get a maximum of $600 for one child ($3,000 x 20%) or $1,200 for two or more children ($6,000 x 20%).
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Join me for a webinar “2012 Tax Changes: How to Avoid Mistakes on Your Tax Return” Tuesday, February 12th at 8:30-10:00pm Eastern Time. The cost is $25 (100% tax deductible!). To register: http://events.r20.constantcontact.co...&llr=yatrx4cab
Holiday Park 11:02 AM 01-29-2013
I am a child care provider and after I had my youngest , my husband paid for before school care (the school had a b&a care program) so he could take them to school early (at 7) and I wouldn't have to worry about taking them if they missed the bus, etc... With tending to my newborn. I also started a childcare baby when my son was 3 months old.
Well my husband paid over 700.00 to the school for this before care program, before we stopped using it. When my husband went into Turbo tax to add that expense as daycare , it took away from our tax refund!
Also there were some childcare expenses he added in their and it either didn't make a difference or made our refund amount go down as well.
We qualify for the earned income credit as well as the Child tax credit (3+ kids) *with my income included* because I only make about 5-7,000. a year max watching very few kids. And we both combined, still fall way below the max amount limit for receiving earned income credit (48,000). My expenses are usually well below 1,000. Around 400 . Every year we get x amount of thousands of dollars from being on the lower income end. But my husband couldnt figure out why putting in daycare expenses (or daycare paid by him ) would drive our refund down.
Well my husband paid over 700.00 to the school for this before care program, before we stopped using it. When my husband went into Turbo tax to add that expense as daycare , it took away from our tax refund!
Also there were some childcare expenses he added in their and it either didn't make a difference or made our refund amount go down as well.
We qualify for the earned income credit as well as the Child tax credit (3+ kids) *with my income included* because I only make about 5-7,000. a year max watching very few kids. And we both combined, still fall way below the max amount limit for receiving earned income credit (48,000). My expenses are usually well below 1,000. Around 400 . Every year we get x amount of thousands of dollars from being on the lower income end. But my husband couldnt figure out why putting in daycare expenses (or daycare paid by him ) would drive our refund down.
TomCopeland 01:20 PM 01-29-2013
Originally Posted by Holiday Park:
I am a child care provider and after I had my youngest , my husband paid for before school care (the school had a b&a care program) so he could take them to school early (at 7) and I wouldn't have to worry about taking them if they missed the bus, etc... With tending to my newborn. I also started a childcare baby when my son was 3 months old.
Well my husband paid over 700.00 to the school for this before care program, before we stopped using it. When my husband went into Turbo tax to add that expense as daycare , it took away from our tax refund!
Also there were some childcare expenses he added in their and it either didn't make a difference or made our refund amount go down as well.
We qualify for the earned income credit as well as the Child tax credit (3+ kids) *with my income included* because I only make about 5-7,000. a year max watching very few kids. And we both combined, still fall way below the max amount limit for receiving earned income credit (48,000). My expenses are usually well below 1,000. Around 400 . Every year we get x amount of thousands of dollars from being on the lower income end. But my husband couldnt figure out why putting in daycare expenses (or daycare paid by him ) would drive our refund down.
I think the reason your refund went down was because of the earned income credit. This credit is tricky because under some circumstances it can go down when your income goes down! Doesn't make sense, but it's possible.I am a child care provider and after I had my youngest , my husband paid for before school care (the school had a b&a care program) so he could take them to school early (at 7) and I wouldn't have to worry about taking them if they missed the bus, etc... With tending to my newborn. I also started a childcare baby when my son was 3 months old.
Well my husband paid over 700.00 to the school for this before care program, before we stopped using it. When my husband went into Turbo tax to add that expense as daycare , it took away from our tax refund!
Also there were some childcare expenses he added in their and it either didn't make a difference or made our refund amount go down as well.
We qualify for the earned income credit as well as the Child tax credit (3+ kids) *with my income included* because I only make about 5-7,000. a year max watching very few kids. And we both combined, still fall way below the max amount limit for receiving earned income credit (48,000). My expenses are usually well below 1,000. Around 400 . Every year we get x amount of thousands of dollars from being on the lower income end. But my husband couldnt figure out why putting in daycare expenses (or daycare paid by him ) would drive our refund down.
LittleCrawfishCC 09:39 AM 01-30-2013
S really in all honesty, that is not much of a deal on parents part!