Tax Facts about Summertime Child Care Expenses

Many parents who work or are looking for work must arrange for the care of their children during the school vacation.  If you are one of those parents, and your children requiring care are under 13 years of age, you may qualify for a child care tax credit.  

Here are some facts that you need to know about the tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year. You must claim the qualifying child for whom you pay care expenses as your dependent to qualify to claim the credit (but there is an exception for divorced or separated parents).

1. Day Camps - The costs of day camp generally count as expenses towards the child and dependent care credit.  A day camp or similar program may qualify, even though the camp specializes in a particular activity, such as soccer or computers. The rule that a dependent care center must comply with applicable state and local laws also applies to a day camp where more than six persons are cared for in return for a fee. 

2. Overnight Camp or Tutoring - No portion of the cost of an overnight camp or a tutoring program is a qualified expense.

3. School Expenses – Only school expenses for a child below the level of kindergarten will qualify for the credit.

4. Day Care Facility – The expenses paid for a day care center qualify.  If the day care center cares for more than six persons, it must comply with applicable state and local laws. 

5. In Home Care - If your child care provider is a “sitter” at your home, the sitter is considered your employee, and you may need to pay payroll taxes and file payroll returns.

These facts are but a brief summary of the circumstances in which the child care credit may or may not be allowed and everyone’s personal financial situation is different.  For more information about how this credit will affect your particular circumstances, or for assistance with properly claiming this credit for your spouse or a dependent age 13 or over who is not able to care for him or herself, please call New Genesis Financial, LLC at 407-992.4454.  Our Expertise Is Your Peace Of Mind!

Time Is Running Out for the $8,000 First-Time Homebuyer Credit

Thinking of buying a home? Now is a good time to do so but you need to act soon if you want to take advantage of the $8,000 first-time homebuyer credit. This credit only applies to purchases completed before December 1st of this year. It does not have to be repaid if the home is occupied as a principal residence for the first 36 months after its purchase. The credit is 10% of the cost of the home, up to a maximum credit of $8,000; therefore, nearly all qualified first-time homebuyers will be eligible for the $8,000 maximum. If the credit exceeds your tax, you can claim a refund of the excess.

You are considered a first-time homebuyer if you and your spouse, if you are married had no present ownership interest in a principal residence in the U.S. during the three-year period before the purchase of the home to which the credit applies. It is important to note that this credit is not available to high-income taxpayers and begins to phase out for married couples with adjusted gross incomes (AGI) in excess of $150,000 and for unmarried taxpayers with AGI in excess of $75,000.

The credit is available on a taxpayer’s 2009 return or amended 2008 return, which means that the funds are not available until after the refund is received from either of those filings. This can be a problem for some potential buyers who have difficulty coming up with funds for the required down payment and closing costs. Recently, however, the Department of U.S. Housing and Urban Development announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the $8,000 first-time homebuyer tax credit toward the purchase costs of an FHA-insured home.

So if you are in the market to purchase a home and you need assistance properly filing your tax return to claim this credit, we are here to help. Give us a call at 407.992.4454 or send an email to info@newgenesisltd.com.