Whether you just spent the entire summer paying for child care and are happy to know that you now have a safe place to drop off your children Monday through Friday or you are wondering where your kids are going to be between the end of the school day and the end of your work day, child care is something that parents are all thinking about and trying to find solutions for at this time of year. In either case you need to know that your child care expenses are often tax deductible, however there are rules to consider, preparations to be made, and documents to save.
The care must be provided for qualifying persons, children age 12 or younger, and for the purpose of you (or you and your spouse if filing jointly) working or looking for work.
You must identify the care providers on your tax return and they may not be your spouse, someone you claim as a dependent, or your child who will not be aged 19 or older by the end of the year even if he/ she is not your dependent.
The credit can be up to 35% of your qualifying expenses, depending on your income.
More information is available on the IRS website and you should discuss child care deductions with your accountant.