Ray Clark, CPA, MBA | Clark & Clark PC | 203 East 800 South | Salt Lake City, UT 84111 | 801-521-4538 | staff@clarkaccountingcpa.com

       

 


 

 

 


 

 

 

Child & Dependent Care Credit + Scams Relating to Orlando Mass Shooting + Small Business Health Care Tax Credit



Keep in Mind the Child & Dependent Care Credit this Summer
 

Day camps are common during the summer months. Many parents enroll their children in a day camp or pay for day care so they can work or look for work. If this applies to you, your costs may qualify for a federal tax credit.

 

Here are 10 things to know about the Child and Dependent Care Credit:

1. Care for Qualifying Persons. Your expenses must be for the care of one or more qualifying persons. Your dependent child or children under age 13 generally qualify.

2. Work-related Expenses. Your expenses for care must be work-related. In other words, you must pay for the care so you can work or look for work. This rule also applies to your spouse if you file a joint return. Your spouse meets this rule during any month they are a full-time student. They also meet it if they are physically or mentally incapable of self-care.

3. Earned Income Required. You must have earned income. Earned income includes wages, salaries and tips. It also includes net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month that they are a full-time student or incapable of self-care.

4. Joint Return if Married. Generally, married couples must file a joint return. You can still take the credit, however, if you are legally separated or living apart from your spouse.

5. Type of Care. You may qualify for the credit whether you pay for care at home, at a daycare facility or at a day camp.

6. Credit Amount. The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on your income.

7. Expense Limits. The total expense that you can use in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.

8. Certain Care Does Not Qualify. You may not include the cost of certain types of care for the tax credit, including:

- Overnight camps or summer school tutoring costs.
- Care provided by your spouse or your child who is under age 19 at the end of the year.
- Care given by a person you can claim as your dependent.

9. Keep Records and Receipts. Keep all your receipts and records for when you file taxes next year. You will need the name, address and taxpayer identification number of the care provider. You must report this information when you claim the credit on Form 2441, Child and Dependent Care Expenses.

10. Dependent Care Benefits. Special rules apply if you get dependent care benefits from your employer.

Keep in mind this credit is not just a summer tax benefit. You may be able to claim it at any time during the year for qualifying care. IRS Publication 503, Child and Dependent Care Expenses, provides complete details on all the rules. Get it anytime on IRS.gov.
 



IRS Warns Consumers of Possible Scams Relating to Orlando Mass Shooting

The Internal Revenue Service issued a consumer alert about possible fake charity scams emerging due to the mass shooting in Orlando, FL, and encouraged taxpayers to seek out recognized charitable groups.

 

When making donations to assist victims of last weekend's terrible tragedy, there are simple steps taxpayers can take to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to quickly and easily check out the status of charitable organizations.

While there has been an enormous wave of support across the country for the victims and families of Orlando, it is common for scam artists to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations.

The IRS cautions donors to follow these tips:

1) Be sure to donate to recognized charities.


 

2) Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find qualified charities; donations to these charities may be tax-deductible.
 

3) Don't give out personal financial information such as Social Security numbers or credit card and bank account numbers and passwords to anyone who solicits a contribution. Scam artists may use this information to steal a donor's identity and money.
 

4) Don't give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
 

5) Consult IRS Publication 526, Charitable Contributions, available on IRS.gov. This free booklet describes the tax rules that apply to making tax-deductible donations. Among other things, it also provides complete details on what records to keep.

Bogus websites may solicit funds for victims of this tragedy. These sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources.

Additionally, scammers often send emails that steer recipients to bogus websites that appear to be affiliated with legitimate charitable causes.

Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords "Report Phishing." More information about tax scams and schemes may be found at IRS.gov using the keywords "scams and schemes."
 



5 Facts about the Small Business Health Care Tax Credit

If you are a small employer, there is a tax credit that can put money in your pocket.

The small business health care tax credit benefits employers that:

> offer coverage through the small business health options program, also known as the SHOP marketplace
> have fewer than 25 full-time equivalent employees
> pay an average wage of less than $50,000 a year
> pay at least half of employee health insurance premiums

Here are five facts about this credit:

1. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.

2. To be eligible for the credit, you must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace, or qualify for an exception to this requirement.

3. The credit is available to eligible employers for two consecutive taxable years beginning in 2014 or later. You may be able to amend prior year tax returns to claim the credit for tax years 2010 through 2013 in addition to claiming this credit for those two consecutive years.

4. You can carry the credit back or forward to other tax years if you do not owe tax during the year.
 


5. You may get both a credit and a deduction for employee premium payments. Since the amount of your health insurance premium payments will be more than the total credit, if you are eligible, you can still claim a business expense deduction for the premiums in excess of the credit. For more information, see the small business health care tax credit page on IRS.gov.

For information about insurance plans offered through the SHOP Marketplace, visit Healthcare.gov.

 

If you have comments or questions on the information in these articles, as usual feel free to call our offices at 801-521-4538.

 

Ray Clark, CPA, MBA

 


Ray Clark, CPA, MBA | Clark & Clark PC | 203 East 800 South | Salt Lake City, UT 84111 | 801-521-4538 | staff@clarkaccountingcpa.com

 

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