Video: Tax Credits for Disabled Dependents
Taking care of a disabled dependent can qualify you for several tax benefits and deductions. Watch this video and find out what they are.
For tax years beginning 2018, the 1040A and EZ forms are no longer available. They have been replaced with a new 1040 form. For those who are filing or amending prior year returns, you can continue to use form 1040A or EZ.
Video transcript:
Hello, I’m Tammy from TurboTax, with important news for taxpayers who care for a disabled dependent. Taking care of a loved one with a disability can sometimes feel like a full-time job. But if you ever need to hire someone to assist you, you may be able to take the child and dependent care credit on your federal tax return this year.
The credit for child and dependent care expenses can save you a significant amount of money because the credit reduces your tax bill on a dollar-for-dollar basis. However, in order to take advantage of this tax benefit, there are a number of requirements you need to satisfy first.
Before evaluating anything else, you should assess whether you can satisfy the earned income requirement. Regardless of the expenses you incur to take care of your dependent, you must have earned income—meaning that you earn it from providing services as an employee or through self- employment. It’s ok if you have unearned income, such as interest and dividends, just as long as you report some earned income on your tax return. And if you are married, you must file a joint return and your spouse must also have earned income in order to take the credit.
Your reason for hiring someone to care for your loved one must be so that you, and your spouse if you are married filing jointly, could work or look for work. But if you have a household employee, who in addition to caring for your dependent is also responsible for cooking and cleaning your home, you can include the expense of their salary in the credit calculation—provided their services are at least partly for the well being of your dependent. And remember, if you plan on taking the credit, you must prepare your tax return on Form 1040 or 1040A (only 1040 beginning in 2018) and attach Form 2441 to it.
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