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Tuesday, December 28, 2010

Dependent Care Credit

A taxpayer who incurs expenses to care for a child under age 13 or for an incapacitated dependent or spouse to enable him or her to work or look for work can claim a dependent care credit.  A prior tax bill had increased the credit amount from $2,400 to $3,000 (from $4,800 to $6,000 for more than one qualifying individual).  It also raised the maximum credit from 30% to 35% of qualifying expenses and provided for a reduction of the credit, but not below 20%, by one percentage point for each $2,000, or fraction thereof, of Adjusted Gross Income above a $15,000 threshold amount.  The 2010 Tax Relief Act extends the enhanced dependent care credit for two years, through December 31, 2012.

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