As we turn towards tax season, parents should be gathering what they need to take advantage of the tax breaks available to families that pay for childcare. The dependent care credit is one way parents can find financial relief when paying for childcare.Dependent Care Credit
The Dependent Care Credit is a tax credit - up to $6,000 - that can be used towards child care programs. A dependent is defined as a child 12 years old or younger. To remain eligible for the credit, care must be provided so the caretaker can work or look for work. The amount of the credit varies between 20 and 35 percent of allowable expenses, and the figure also depends on the adjusted gross income of the guardian. It is recommended that parents discuss the dependent care credit with their accountant to reap its full benefits.
Dependent Care Credit Eligible Programs
The dependent care credit can be applied towards Bennett Day School’s MorningCare and AfterCare programs. These programs create a gentle transition into the traditional academic setting, MorningCare begins with breakfast and activities led by Bennett Day teachers in the classroom. When the school day is over, AfterCare provides physical play, fun and snacks. Working parents who might have difficulty adjusting their work schedule with their child’s school schedule can have more flexibility when they are able to partake in such programs. A dependent care credit can be an extremely useful tool for working parents who want the best for their child(ren).
The 529 plan was created to allow families to save money for college by contributing funds to a tax-free account that accrues compounding interest. Additionally, some states also offer deductions or credits to those who contribute to a 529. Under the new tax overhaul, the 529 plan was expanded to include private schools that provide education from kindergarten through 12th grade. (It is not yet clear how Illinois plans to modify their state laws to include the new provision.) This means there is a way to save for private school and college with a tax-free, compounding interest account, while opening the door to additional tax breaks. Parents should talk to their financial advisors to explore additional opportunities offered by 529 plans.
Bennett Day School offers many great programs to help reduce the stress and worries of the parents. We’re happy to educate parents on the opportunities and tools available for their use to further their child’s future. Click here to check out the MorningCare and AfterCare programs.