Tax Tip of the Week
For the week of January 19, 2004

This credit is not just for children

As you gather information for your 2003 tax return, don't overlook the child and dependent care credit. You might be eligible for this credit if you pay for child or dependent care so you can go out to work, look for work, or attend classes. The credit is a direct offset against your taxes. It is calculated as a percentage of the expenses you incur, subject to certain limits.

Many people claiming the credit are parents with children under age 13. But the credit is not limited to child care. Expenses you incur to care for any dependent who is mentally or physically unable to care for himself or herself can qualify. For example, you might be able to claim the credit if you're caring for a disabled spouse or an elderly parent. Even expenses to care for some non-dependents can qualify.

The rules became more generous in 2003. The amount of expenses that qualify for the credit increased to $3,000 for one child or dependent, and to $6,000 for two or more. The percentage you can claim also increased. It is now between 20% and 35%, depending on your income.

The rules on who qualifies and the calculation of the credit are quite complicated. But if you think you might qualify, contact our office and we will be pleased to assist you.

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