I moved my 4-year-old son from day care to a preschool program at a private school this month. Does the cost of preschool still count for the child-care tax credit?
Yes, the cost of preschool can still count toward the child-care credit -- just like the cost of day care, a nanny or babysitter, and day camp in the summer and during holidays. The cost of school doesn’t count once your child reaches kindergarten, but the cost of before-school and after-school care can qualify until your child reaches age 13, if you pay for the care so you can work.
To take the credit, both you and your spouse must work (or be looking for work). You can also qualify if one spouse is a full-time student and the other is working. The total credit depends on your income. Families earning less than $15,000 can claim a credit for up to 35% of eligible expenses. The percentage gradually decreases to 20% of eligible costs for families earning more than $43,000 (there is no maximum income limit).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You can claim up to $3,000 in eligible child-care expenses for one child or up to $6,000 for two or more children, but the actual credit equals $600 to $1,050 if you have one child, or $1,200 to $2,100 if you have two or more children. It is a tax credit, rather than a deduction, so it lowers your tax liability dollar for dollar.
For more information, see IRS Publication 503 Child and Dependent Care Expenses.
-
Stock Market Today: Stocks Close Mixed Amid War Angst, Nvidia AnxietyMarkets went into risk-off mode amid rising geopolitical tensions and high anxiety ahead of bellwether Nvidia's earnings report.
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
Tax Credit vs. Tax Deduction: What’s the Difference?Tax Breaks Your guide to tax deductions and credits, how the IRS treats them differently, and how they impact your tax bill.
-
Premium Tax Credit: Are You Eligible For This Health Insurance Tax Break?Tax Credits The tax credit can help qualifying individuals pay for coverage from the Affordable Care Act’s health insurance marketplace.
-
IRS: Here’s How to Recover Your Tax Records After a Natural DisasterTax Records Your tax documents can help you get federal relief faster, the IRS says.
-
Voters Approve New Veteran Property Tax ReliefTax Relief Thanks to the election, some Veterans will soon see expanded property tax exemptions.
-
Nevada Approves Diaper Tax Relief Amid Childcare CrisisTax Relief Nevada voters have expanded sales tax relief to diapers. But are prices still too high?
-
Earned Income Tax Credit (EITC) 2024: How Much Will You Get?Tax Credits The refundable amount for workers with or without children is slightly higher this year. Here’s what you need to know.
-
Five Cities With the Lowest Property Tax in the U.S.Property Tax Property taxes are ultra-low in these popular metro areas, but is housing affordable?
-
IRS Expands Tax Breaks for Breast Cancer Screenings, ContraceptivesHealthcare Now you can get a tax deduction or reimbursement for certain medical expenses, like over-the-counter birth control and condoms.
