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Question for the Money Doctors

Question submitted on Feb 12, 2013.

Question

If I am caring for a child and the child receive support from the state, can I claim the child on my income tax and if I pay part of the child care fee and the state pay the majority, can I claim on my income tax the portion of the child care fee that I pay?

Answer

You may be able to claim the child as a dependent on your tax return, but you would have to calculate whether you have provided more than 50% of the total support for the child, excluding the amounts received from the state. There is a worksheet in IRS Publication 17 that may be useful to you in calculating whether the child can be claimed as your dependent.

If you can claim the child, you can then claim the portion of child care expenses that you pay which are not reimbursed by a state social services agency. The IRS explains this in Publication 503.

"If a state social services agency pays you a nontaxable amount to reimburse you for some of your child and dependent care expenses, you cannot count the expenses that are reimbursed as work-related expenses.

Example.

You paid work-related expenses of $3,000. You are reimbursed $2,000 by a state social services agency. You can use only $1,000 to figure your credit.


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