Dependent Care Credit 🔴 (IRS Massively Boosts Tax Savings For Individuals) 💰

[@MoneyandLifeTV]

Chapters (Time Stamps): 0:00 - 0:45 (Top 5 best tax credits) 0:46 My personal story with this credit 1:42 Does your dependent have to live in your home? 2:12 - Residency rules 2:47 - Filing status matters 3:55 - 8:50 How the dependent care credit works 8:54 - 10:05 Recap and other important details 10:07 - Credit amount for 2022

[@MoneyandLifeTV]

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[@dmay9081]

Thanks for video

[@MoneyandLifeTV]

Most welcome

[@MoneyandLifeTV]

During the premiere I may not be able to address all questions so please leave them in the comment section. :)

[@itsamea_]

Great video 👍🏽

[@MoneyandLifeTV]

Thank you! 👍

[@victorialungu2554]

Great video! Thank you so much!

[@MoneyandLifeTV]

You are so welcome! Thanks Victoria :)

[@martavillanueva1062]

Love how articulate your explanations are.

[@MoneyandLifeTV]

Thank you Marta! I try :)

[@daveschmarder-1950]

Downloaded my tax documents from Vanguard a couple days ago. What a ****show it is this year with their dividend reporting. They used to neatly add it up and it was easy to enter the numbers, but they decided that was too easy and they put each type of income on a separate line, and for each date. No more combining the numbers for the year. You think they had a reason for this? I did some tax loss harvesting this year already. My spreadsheet shows the cost basis of each lot. I'm mostly done with that now, unless the market drops a lot further. Then I'll realize gains in some old mutual funds to match the losses. No wonder why you have so much fun doing this, Mike. You have the energy to do some great videos for us too.

[@MoneyandLifeTV]

Hi Dave, I cannot believe Vanguard 😐 did that. Have you contacted them asking for a more summarized version of the report? Perhaps ask them first or ask for an excel version to save yourself time. Great job on the tax loss harvesting. I need to do a video on that topic. But it sounds like you are the expert good sir ;)

[@daveschmarder-1950]

@@MoneyandLifeTV I don't know about the expert part. I'm just trying to make up for my past stupidity. I was able to figure out the Vanguard thing. I figured out what the qualified dividend part was, and the total dividends and capital gains. They split out the short term gains too, but I hadn't sold anything. I think there is a 60 day minimum hold to qualify for the long term. The IRS will correct anything I got wrong. They are good at that. It looks like I'm in line for my 2022 also. If it turns out that the mutual fund distributions are low, I can do nothing or something else to bring up the income.

[@jadenardini7736]

I love your channel and your videos. Now, I understand the concept 'Child and Dependent Care Expenses Credit' I appreciate you.

[@VOGASforVeinOfGoldAndSilver]

Thanks again. 🤝🤗🤝

[@susiekelly4322]

Always helpful information!

[@MoneyandLifeTV]

Thanks Susie!

[@freddiebutler3653]

Great video! Thank for information.

[@MoneyandLifeTV]

Thanks Freddie! Much appreciated sir.

[@alirambo8792]

Yup, here in California Care is so expensive! Saving clients the full 4k per child.

[@alirambo8792]

Up to 8k

[@dariakaraulova2812]

Great video. On what line would rollover of pre-tax money from 401k to Roth be reported on 1040? Is there additional form necessary to file with this transaction like form 8606 or May be other one?

[@MoneyandLifeTV]

HI Daria I believe the rollover is reported on page 1 of 1040. Can’t remember what line but I think it’s 7 8 or 9. If you are using tax software it should place it right where it needs to be 😊 as long as you code it correctly on the input.

[@tomatodo8334]

Great Video. In the future, can you do a video on 4 yr college expenses (tuition) tax credits?

[@MoneyandLifeTV]

Yes I can Toma, and plan to. Thanks for the suggestion. 😀

[@1DansBlues]

You made a small mention that I have addressed to clients, it’s Married Filing Separately. Many think that filing Separately will save them taxes. While it is an acceptable filing status, I often tell clients the Feds often penalize you for filing separately as you lose some of the benefits of filing jointly. Any way a great video and content on this dependent credit. Your videos are top notch.

[@MoneyandLifeTV]

Thank you Dan! Appreciate the input. From what I have seen is that married filing separate generally creates a larger tax burden for taxpayers the majority of the time.

[@ashrafpardiwala6974]

I have my parents who are both 65yrs aged with no income how can I get credit for them and what other tax benefits I am filing as headofhouse.pl.anser me urgently.

[@MoneyandLifeTV]

Hi Ashraf, well it sounds like they may be your other dependents so there is the other dependent credit. $500 for each parent. As far as the dependent care credit goes please see the form instructions and view what counts as qualifying expenses for the credit:www.irs.gov/forms-pubs/about-form-2441 I can't say for sure that you will be able to take it but it is worth looking into. You will have to analyze the facts and circumstances of your situation generally you could only claim this for your parents if you paid someone to help take care of them.....like a nurse to watch them during the day while you are at work. Hope that helps.

[@dmay9081]

My disabled brother lives with me and wife , wife was full time 3 months of 2021 now part time 28 hrs a week, she made 18000 I made 47000, my brother gets a ss check. Can I use this in your opinion?

[@dmay9081]

We don't have kids and in 50s

[@MoneyandLifeTV]

Hi I believe you may be able to: www.irs.gov/taxtopics/tc602 . Follow this link to test if you do:www.irs.gov/help/ita/am-i-eligible-to-claim-the-child-and-dependent-care-credit Also see additional info below. From IRS website.......... A qualifying individual for the child and dependent care credit is: Your dependent qualifying child who was under age 13 when the care was provided, Your spouse who was physically or mentally incapable of self-care and lived with you for more than half of the year, or An individual who was physically or mentally incapable of self-care, lived with you for more than half of the year, and either: (a) was your dependent; or (b) could have been your dependent except that he or she received gross income of $4,300 or more, or filed a joint return, or you (or your spouse, if filing jointly) could have been claimed as a dependent on another taxpayer's 2021 return.

[@TheLeonmario2004]

How come a 13 year old qualify, if they go to school full time? For ex: I take my daughter(4 year old) to private school because the public school doesn't have after school programs. The reasons we need the after school is because me and my wife work 8 hours or more. Without after school my daughter would get out of school too early and none of us would be able to pick her up. Do we qualify for this credit?

[@MoneyandLifeTV]

Hi Mario great questions. Let me clarify. your child would need to be under the age of 13 to qualify. Do you pay additional care expenses for the after school program or is it free? You daughter being 4 years old as the potential to qualify you for the credit. Here some examples from irs website. www.irs.gov/publications/p503#en_US_2021_publink1000203302 Education. Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care. Expenses to attend kindergarten or a higher grade aren't expenses for care. Don't use these expenses to figure your credit. However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care. Summer school and tutoring programs aren't for care. Example 1. You send your 3-year-old child to a nursery school while you work. The nursery school provides lunch and a few educational activities as part of its preschool childcare service. The lunch and educational activities are incidental to the childcare, and their cost can't be separated from the cost of care. You can count the total cost when you figure the credit. Example 2. You are a member of the Armed Forces, and you are ordered to a combat zone. To be able to comply with the order, you place your 10-year-old child in a boarding school. Only the part of the boarding school expense that is for the care of your child is a work-related expense. You can count that part of the expense in figuring your credit if it can be separated from the cost of education. You can't count any part of the amount you pay the school for your child's education.

[@TheLeonmario2004]

@@MoneyandLifeTV thank you for your response. Yes, she is in pre-k and we pay for classes and and after school care.

[@damnImbeast]

Hello thank you for the information! Great channel. I do have a question, and I would love your guidance. My mother babysat my son most of last year due to the pandemic and I paid her cash payments. She is unemployed but files jointly with my father. Would she need to report the amount that I paid her as income in their joint tax return? Thank you.

[@MoneyandLifeTV]

Hi Daniel, thanks for the support. Technically yes she should, however, I know most do not report that type of income (especially when it is in the form of cash). Hope that helps.

[@jarc02]

Hi Mike. For a future video could you cover the Form 4952 Investment Interest Deduction and the QBID. I had margin interest this past year and I have $5.00 that was carried to line 7 of Form 4952 Disallowed Investment Interest. Certain ETF's and REITS in my taxable accounts allowed me a $1.00 QBID CR. As I dollar cost average into my accounts going forward this will most likely get bigger. Looking forward to you getting back to investing videos but these forms are the result of my investments this past year per my brokerage Consolidated 1099's. The software I used automatically completed them.

[@MoneyandLifeTV]

Hi Jarc, I never considered doing a video on form 4952, but would make for a great topic especially since investing related. Perhaps after tax season I can tackle that one. thanks :)

[@Lk-uc5rt]

Great video. Can you please explain what forms to use foreign rental income? And how to input information on form 1116.

[@MoneyandLifeTV]

I cannot sorry I do not have experience in that area.

[@Gary65437]

Interesting tax saving topic. Have you done a video on capital gains schedule D and dividends and whether you can offset dividends with a capital stk loss? Do you have to use a 1040 form if you only have 1 or 2 stk sales and minor dividend income or maybe use a 1040EZ?

[@MoneyandLifeTV]

Hi Gary, I have a few videos that cover capital gains: You can checkout my complete tax video playlist here:kzbin.info/aero/PLSofnwEEZdUwO76397C824IRz5xofXEQz Look for a video titled "reporting stock sales on taxes" You can use a stock loss up to $3,000 to offset other forms of income.

[@d.revilbrook981]

Please do a video on grantor type trust

[@mbtax7389]

Will it be applicable for next tax year , ending on Dec 2022

[@MoneyandLifeTV]

Hi MB, yes the credit will still be around but at its original rates and amounts. 2021 was a special year for the credit.

[@Triniboi05]

Thanks Mike! I was aware of this credit but it is obviously one that changes constantly, so thanks for breaking down the changes as well. I'm in a unique situation that is a bit unfair. I provide more than half the dependent care for my child however, I am divorced and the child lives more than half the year with the mother. Therefore I am unable to claim this credit, despite paying for the majority of the childcare. It's really unfortunate and unfair.

[@MoneyandLifeTV]

I'm so sorry to hear that Jay R. Does not seem fair whatsoever. They should consider allowing parents with that type of custody arrangement to split it.

[@Triniboi05]

@@MoneyandLifeTV Agreed! I hope they do some day.

[@BrigitteBrodski]

you use Ultra Tax!

[@MoneyandLifeTV]

Oh no you caught me :) Is that what you use?