Hello, I’m Tammy from Turbo Tax, with important news
for taxpayers who care for a disabled dependent.
Taking care of a loved one with a disability
can sometimes feel like a full-time job.
But if you ever need to hire someone to assist you,
you may be able to take the child and dependent care credit
on your federal tax return this year.
The credit for child and dependent care expenses
can save you a significant amount of money because the credit reduces
your tax bill on a dollar-for-dollar basis.
However, in order to take advantage of this tax benefit,
there are a number of requirements you need to satisfy first.
Before evaluating anything else, you should assess
whether you can satisfy the earned income requirement.
Regardless of the expenses you incur to take care of your dependent,
you must have earned income— meaning that you earn it from providing services
as an employee or through self- employment.
It’s ok if you have unearned income, such as interest and dividends,
just as long as you report some earned income on your tax return.
And if you are married, you must file a joint return
and your spouse must also have earned income in order to take the credit.
Your reason for hiring someone to care for your loved one must be so that you,
and your spouse if you are married filing jointly, could work or look for work.
But if you have a household employee,
who in addition to caring for your dependent is also responsible
for cooking and cleaning your home, you can include the expense of their salary
in the credit calculation—provided their services
are at least partly for the well being of your dependent.
And remember, if you plan on taking the credit,
you must prepare your tax return on Form
1040 or 1040A and attach Form 2441 to it.
When you file with TurboTax, we’ll ask you simple questions
about your income and dependents, and we’ll fill in all the right forms for you.
For more information about this and other tax topics, visit TurboTax.com.