Taking care of a possible deduction
Reader was told that a day-care centers enrollment fees may be tax-deductible.
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EAR HARRY: We have a 4-year-old who has been enrolled in a day-care center for several years. It's more than a play center. She has learned the alphabet and also is learning numbers and some elementary math. The center's administrator just informed a group of us that the enrollment fees may be tax-deductible. My tax preparer never told us about this. Is this so? What about past years? Are we missing anything else related to her care?
WHAT HARRY SAYS: The Internal Revenue Code provides a credit for the care of children below the age of 13. It also applies to a spouse and a child of any age incapable of self-care. The payments must be made to enable the taxpayer to work (both taxpayers on a joint return). The credit is a percentage of the expenses paid for the care. Expenses have a maximum of $3,000 for one dependent and $6,000 for more than one. These are then used in a table for different Adjusted Gross Income levels to get the credit percentage. The credit is from 20 to 35 percent, and it bottoms out at AGIs above $43,000. Expenses for kindergarten and above do not qualify. Day-care centers must meet all state and local licensing requirements. As you can see, there are many ins and outs, as well as limitations, so the computation of the credit is not easy. I strongly recommend using a computer program. You should file a Form 1040X (Amended Return) for 2014, 2013 and 2012 if you had these expenses in those years.
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