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Ask An Accountant-How Should I Claim Day Care?

Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at cjwtaxpro@gmail.com with the subject line “Ask an Accountant”.  See previous questions and answers HERE

Question:

 I have two questions:
 
1. Can I claim the after school program my son is in? He is in Kindergarten and instead of paying for an after school sitter we are paying for an after school program at the school. Is that deductable?
 2. Can we claim/deduct our moving expenses?

Answer:

Day care is eligible for a credit which is a direct reduction of tax.  Much more beneficial than a deduction.  As longo as taxpayer and spouse have earned income you can deduct the daycare.  The credit is calculated at a percentage of.what you pay and depending on your income level it may be phased out.  You will also need the EIN of the daycare provider.

Moving expense deductibility assuming you were not reimbursed for any moving expenses: 
If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses but not any expenses for meals. To qualify for the moving expense deduction, you must satisfy two tests. Under the first test, the “distance test”, your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home.

The second test is the “time test”. If you are an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location. There are exceptions to the time test in case of death, disability and involuntary separation, among other things.

If you are a member of the armed forces and your move was due to a military order and permanent change of station, you do not have to satisfy the “distance or time tests”.

*Please keep in mind this post is for informational purposes only and answers given are very general.  Do not rely on this column for definite tax answers as many things depend on individual circumstances.  Please contact your personal accountant or financial advisor for your particular situation.

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2 Responses to "Ask An Accountant-How Should I Claim Day Care?"

  1. [...] An Accountant- How Should I Claim DayCare Expenses? September 16, 2011 Leave a Comment THANKS FOR THIS GREAT GUEST POST – MOM ON DEALZ Although tax season is over, tax questions arise year round. My husband is an experienced [...]

  2. QponXris says:

    Good article. I just have one thing to add. I worked with a tax preparation service in 2010, and this is what I realized. Most people that work in the military did not qualify for the moving expenses deduction because of two reasons. First reason, as you mentioned, they do not qualify for the distance test. The second reason, the government reimburses in some way for the moving expenses.

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