And the Credit Goes to....(Tax Benefits for Parents)

How to choose the right child care tax credit

(PRWEB) November 22, 2002 -- The joys of parenting are, for the most part, numerous and immeasurable -- except when it comes to your taxes. The IRS allows parents a tax deduction for child care expenses. The only thing you need to decide is which deduction to take. There are two options available to you: (1) the Cafeteria Plan and (2) the Child Care Credit. Sherrie A. King, Enrolled Agent helps parents make sense of the tax rules and determine which option would result in paying less tax.

When considering the options, King says to consider:

·   The Child Care Credit found on Form 2441 only allows a maximum of $2,400 in child care payments for one child or $4,800 for more than one child. Any payments over that amount would be lost. Though the deductions will rise to $3,000 and $6,000 respectively in 2003, they still may not make enough of an impact on your taxes. The credit could be lost if the amount of Federal tax owed is less than the credit.

·   Amounts paid for child care into a Cafeteria Plan through your employer are excluded from taxable income. The catch here is that you must estimate the amount you will spend for child care at the beginning of the year and make payments based on that estimate. If you estimate too much, the excess is lost. If, however, you estimate too little, an opportunity to defer more income is also lost.

For assistance navigating these and other tax matters, it makes good sense to contact an Enrolled Agent who can review your specific situation and offer help that fits your needs. Enrolled Agents are federally authorized tax practitioners who have technical expertise in the field of taxation and are empowered to represent tax payers before all administrative levels of the IRS.

About King Tax & Accounting
King Tax & Accounting is operated by Sherrie A. King, an Enrolled Agent. The practice represents clients in all types of businesses, as well as individuals, in the areas of taxation and accounting. They provide tax preparation, tax advice, and tax planning services in addition to helping taxpayers resolve problems with the IRS. For more information, contact (919) 676-2114 or www.KingTaxAccounting.com.

King Tax & Accounting is a member of GMG Alliance -- a strategic alliance with Development Strategies (www.RequestDS.com) that offers expert professional services in business strategy, tax accounting, and human resources.