Parenting is probably one of the most expensive endeavors in life that anyone can embark on. Raising a child from infancy to college is a significant investment, and that doesn’t even count expenses incurred during pregnancy or through early adulthood. Lucky for us, the government agrees that it’s expensive to have and rear a child, and they’ve given us a few options for some financial relief when it comes to having kids.
Dependent Care Credit
This credit is less well known than the Child Tax Credit, but it can still be useful, especially for working parents, allowing you to look for and keep a job. Straight from the IRS, "If you paid someone to care for your child or other qualifying person so you (and your spouse if filing jointly) could work or look for work, you may be able to take the credit for child and dependent care expenses." This credit applies only to those who have lived in the US for half the year (military exemption). The dependent must be a child under the age of 13, a spouse, or dependent who is unable to take care of themselves, which includes parents or disabled children.

But what if my kid doesn’t go to full-time daycare? Guess what. This credit can count for day camps (think summer camps) and after-school care. What it doesn’t count for is things like summer school, private school, child support, tutoring, or sleepaway camps.
The other consideration for this is whether you use an employer FSA Dependent Care. Please refer to our previous post on FSA Dependent Care (Kids and Cost Savings: Part 1) for more information on this, but you can qualify for both if you spend above the FSA limit of $2,500 (or $5,000 if filing jointly). My wife and I definitely spend more than the FSA amount and have used this credit every year we’ve been able to. If you have any questions about qualifying, please reach out. We would love to help any parent struggling to figure out how to get the largest return possible.
Having and taking care of children is always going to come at a significant cost to you, so take advantage of every benefit you can. Please refer to Part 1 of this series for my first two tips, and stay tuned for Part 3 for more ways you can save with kids!
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