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Tuesday, June 30, 2015

The Dependent Care Credit and Summer Camp

The Dependent Care Credit and Summer Camp

Did you know that costs for summer camp may qualify for a tax break via the Child and Dependent Care Credit?!  This credit is available for parents who pay for child care so that they can work or look for work.  Read on for great tips!

1. Filing status counts – if you are married, you must file jointly to get the credit.  You are not eligible if you are married and file separately.  There are exceptions if you are legally separated or live apart from your spouse.

2. Camp costs must be for your dependent child / children, who are under age 13 at time of care.

3. Camp costs must be incurred so that you and your spouse can work or look for work.  One spouse can be treated as working for any month that they are a full time student.

4. You and your spouse must each have earned income from wages, salaries, tips or self-employment net earnings.

5. You will need the name, address and taxpayer identification number of the camp provider.  You should save your receipts and records to make it easier to claim the credit on your tax return.

6. The amount of the tax credit is between 20% - 35% of your allowable expenses.  Your applicable percentage is based on your income.

7. There is a limit on allowable expenses of $3,000 for one qualifying child and $6,000 for two or more qualifying children.

8. The following costs do not qualify for the credit: costs for overnight camps or summer school tutoring costs, care provided by a spouse or your child who is under age 19, or care given by a person you can claim as your dependent.

9. If you or your spouse receives dependent care benefits from an employer, the amount of your allowable expenses will be reduced.

By: Honorine M. Campisi, Senior Tax Manager

Tuesday, June 2, 2015

Marriage Impacts Your Finances

Find some time to discuss these topics before walking down the aisle.

1. Combine it all, keep it separate, or a little of both; consider what strategy will work best for the both of you when setting up your bank accounts.

2. A little mystery keeps things interesting – but not when it comes to your future spouse’s financial investments!  We live in an electronic world, where many of us keep our investments online with no paper trail.  Will your spouse know how to access all your accounts if something happens to you?  Many brokers no longer mail necessary tax forms and require them to be printed from their websites – make sure you both know how to gain access.

3. Know what financial baggage each of you brings to the relationship.  Do you have a huge debt to pay off, have you filed for bankruptcy, and are you up to date on required tax filings?

4. Evaluate your health – insurance, that is.  Will you combine coverage to save money, or keep separate policies?  If you have coverage through the Health marketplace, you’ll need to re-evaluate your coverage.  Consider getting new quotes for car, home or renter’s insurance, and an umbrella policy if you own a home.

5. Ask your tax advisor about adjusting your tax withholding.  Your tax situation changes once you’re married and could result in a bigger (or smaller) tax bill.  Plan ahead to make sure you know what to expect to avoid an unwelcome surprise at tax time.

6. Evaluate and maximize your retirement strategies.  Your marriage and the resulting combined income may impact your ability to continue making IRA contributions.

7. Draft your wills!  This is at the top of the list of must do’s, but understandably gets put off since no one likes to think about death.   

By: Honorine M. Campisi, Senior Tax Manager