Do everyone a favor. Start working on your 2011 tax returns right now. Now is the time to get your act together, rather than at eleven o’clock at night on the phone with the IRS the night before taxes are due. The helpline folks really are quite nice, and you will feel badly for having yelled at them, more than once, in an extended conversation during which they very well might have saved you about a thousand bucks. Believe me, you don’t want to do that. You’ll feel guilty the next morning as you perform your own personal IRS walk of shame to your car – tired, with a toddler in tow – as the neighbors peer out their windows and shake their heads, knowing that you procrastinated, again. They know because they heard you yelling on the phone last night.
Of course, I’m just sayin’– something like that could happen. And you might regret it. So, let’s say we all start now and get out ahead of tax season by examining two popular credits available to families.
Child and Dependent Care Credit.
Many families are eligible for this credit of up to 35 percent of qualified expenses of up to $3,000 for one dependent or $6,000 for two or more dependents.That translates to up to $1,050 in credit for one, or $2,100 in credit for two or more children. A qualifying child must be under the age of 13, or 13 or older if physically or mentally incapable of self-care. Your filing status must be single, married filing jointly, head of household, or qualifying widow(er). You, and your spouse if you file jointly, must have earned income (one spouse may be exempt from this requirement if he or she was physically or mentally unable to provide self-care or was a full-time student in 2011). Finally, care payments cannot have been provided to you, your spouse, the parent of your qualifying child, someone who can be claimed as a dependent on your return, or your child aged 18 or younger at the end of the year, even if he or she cannot be claimed as a dependent.
Additional Child Tax Credit.
A child tax credit of up to $1,000 may be available for each qualifying dependent child who was 16 or younger at the end of 2011. The credit begins to phase out with an adjusted gross income of $110,00 for people married filing jointly, $55,000 for married filing separately, and $75,000 for single filers. And yes, this is in addition to any exemption you can claim for your children as dependents. There are many, many more tax credits available to families, including but not limited to: earned income tax credit; education credits (American opportunity credit and lifetime learning credit); adoption credit; saver’s credit; hybrid/electric car credit; and home energy tax credit. IRS requirements on these credits include many nuanced specifics that are not detailed above. So, consult with a tax professional to insure compliance and maximize your options. And start your work now. Avoid that phone call to the IRS helpline and the walk of shame.Instead, take a walk in Carytown and enjoy brunch on tax weekend. Beignets and coffee, with some of your favorite people. What a way to spend part of your refund!