Introduction to tax credits for parents of
children
with diabilities.
sponsored by the
Stepnowski Law Offices
In the last article, we described deducting medical expenses.
This article discusses credits.
This article is geared toward helping parents with children with
disabilities understand the tax laws.
Please do not use
this article as definitive advice, as your situation
may vary. Consult your attorney or tax professional.
Definitions of which children qualify as dependents also changes from
year to year, so always check the latest information. Nothing on
this page creates an attorney-client relationship.
The Child and Dependent Care
Credit
The IRS provides a Child and
Dependent Care Credit
for the work-related expenses incurred for dependents of the taxpayer.
In most cases, the dependent must be under the age of 13, but if the
child has a disability and requires supervision, there is no age limit.
For example, a 17-year-old with a behavior
disorder who cannot be left without adult supervision would be a
qualifying child for this credit.
Ordinarily the credit is available
only for children under the age
of
13, but the credit is available to a dependent of any age who is
"physically
or mentally not able to care for himself," namely: "Persons who cannot
dress, clean, or feed themselves because of physical or mental problems
are considered not able to care for themselves. Also, persons who must
have constant attention to prevent them from injuring themselves or
others
are considered not able to care for themselves."
You can list your expenses
up to $3,000 per year for one qualifying dependent and up to $6,000 for
two or more qualifying dependents. Since the Feds designed this tax
benefits to help parents keep jobs, the IRS allows you to list expenses
for regular
childcare services, after-school programs, or summer day camp but
not programs such as an overnight summer camp expenses. Payments to a
relative
to care for a child also qualify, as long as the relative is not a
dependent of the taxpayer. The benefit of the credit is 20 to 35 % of
the allowable expenses, depending on the family’s adjusted gross
income. Thus,
the credit can be worth $600 for one child with $3,000 after school
expenses, and $2,100 for more than one child.
For more information, see IRS
Publication 503, Child and Dependent Care Expenses.
These credits do not get deducted on your schedule A deductions, and so
are not limited by the threshold amounts. The credit is given on
the back of your form 1040.
Earned Income Tax Credit
If your adjusted gross income (AGI)
is below $37,263 for couple filing jointly ($1,000 less for
taxpayers filing as single or head of household), you may
qualify for the Earned Income Tax Credit (EITC) if you have one or two
“qualifying children” in the taxpayer’s home. For the EITC, a
“qualifying child” is a biological child, adopted child,
step child, or foster child who resided with the taxpayer for more than
six months during the calendar year, and is under age 19 at the end of
the year. A “qualifying child” is also a child age 19-23 who is a
full-time student for at least one semester. Finally, a severely
disabled child is a “qualifying child” without regard to age, even into
adulthood, as long as the child continues to live with his
parent(s). A “qualifying child” for EITC does not have to meet
the
requirements for a dependency exemption. EITC benefits are as
high as
$4,400 for families with two or more qualifying children, but your
amount will vary depending on the number of children and yuor income.
See IRS Publication 596 for
more information.
These credits do not get deducted on
your schedule A deductions, and so
are not limited by the threshold amounts. The credit is given on
the
back of your form 1040.
The Illinois Education
Credit
The State of Illinois allows a tax credit of 25% of
educational expenses up to $2000, excluding the first
$250. That means if you pay $2250 in educational expenses,
you can take a credit of $500, which is 25% of $2,000.
Since many parents must supplement their childrens' learning at home,
such as an ABA program, this credit can help.
“Qualified education
expenses” shall mean amounts incurred on
behalf
of a
qualifying pupil in excess of $250 for tuition, book fees, and lab
fees at the school
in which the qualifying pupil is enrolled during the regular school
year ....
Amounts incurred for tuition, book
fees and lab fees
by a family
that is the custodian of more than one qualifying pupil may aggregate
all tuition,
book fees and lab fees incurred by the family in arriving at qualified
education
expenses eligible for the credit.
School expenses may be for public,
private or home school:
“School”, for purposes of
the education expense credit,
means any public or
nonpublic elementary or secondary school in Illinois ...
[N]othing shall be construed to require a child to attend any
particular
public or
nonpublic school in order to qualify for the education expense credit
... Private
schools providing educational instruction in the home, attendance
at which
meets the compulsory education requirements of Section 26-1 of the
School
Code, are included within the meaning of “school” for purposes of
the education
expense credit.
Students through grade 12 qualify:
"Qualifying pupils" means
individuals
who
(i) are residents of the State of Illinois,
(ii)
are
under the age of 21 at the close of the school year for which a credit is sought, and
(iii)
during the school year
for which a credit is sought
were
full-time pupils enrolled in a
kindergarten through twelfth
grade education program
at any school, as defined
in this subsection.
For a full discussion and more details on the Illinois
Education Tax credit see this page.
IRS Circular 230 Disclosure
To ensure compliance with requirements imposed by the IRS, we inform
you that any U.S. federal tax advice contained in this communication
(including any attachments) is not intended or written to be used, and
cannot be used, for the purpose of (i) avoiding penalties under the
Internal Revenue Code or (ii) promoting, marketing or recommending to
another party any transaction or matter addressed herein.
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