Money Matters – Mid-Year Tax Planning: Miscellaneous
BOSTON (CBS) – Summer Time Child Care Expenses
Many parents who work or are looking for work must arrange for care of their children during the school vacation.
The Child and Dependent Care Credit is available for expenses incurred during the lazy days of summer as well as throughout the rest of the year.
- The cost of day camp can count as an expense towards the child and dependent care credit.
- Expenses for overnight camps do not qualify.
- A sitter in your home qualifies.
- The actual credit can be up to 35% of your qualifying expenses, depending upon your income.
- You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
This credit can also be claimed for a spouse or a dependent age 13 or over who is not able to care for themselves, check out IRS Publication 503, Child and Dependent Care Expenses This publication is available on the IRS website, or by calling 800-TAX-FORM (800-829-3676).
Charitable Contributions Directly From Your IRA
This may be the last year that Individuals over 70½ are able to make qualified charitable contributions from their IRA up to $100,000. They do not need to include the distribution in income and they can claim a charitable contribution deduction. This is a good thing because it will not raise your income for limits on such things as your medical deductions on your 1040 and for your Social Security part B.
The maximum adoption credit for 2011 is $13,360, subject to income limitations, and it is refundable. If the credit amount exceeds your tax bill, the government will pay you. For next year, the credit is expected to be lower and nonrefundable. Adoptions involve a lengthy process, so start the process soon so that your expenses will fall into this year rather than in 2012.
So over the last seven months have you saved that extra 2% the government has not taken out of your paycheck or have you spent it in drips and drabs? Currently you are only paying 4.2% instead of the 6.2% into Social Security for this year. If you are earning $50,000 that 2% amounts to $1000. Consider increasing your retirement plan contributions by 2%.
Congress right now is working on the budget and with that will come changes. Probably tax changes. So stay alert to any changes that will affect you and your family. And the best tax planning you can do is put away money into your retirement plan using pre-tax dollars.