TAXES, PART DEUX

The Earned Income Credit (EIC) and the Child and Dependent Care Credit are other tax benefits available for families of children with disabilities. EIC is a special credit available to taxpayers with earned income less than $24,396 in 1995 who have a "qualifying child" in their home (or income less than $26,673 with two or more "qualifying children"). A qualifying child is a biological child, adopted child, stepchild, grandchild or eligible foster child who is under age 19, or 24 if a full time student. An individual may be a qualifying child at any age if disabled. The qualifying child must have lived with you for more than half of 1995 (the entire year for an eligible foster child).

If you qualify for EIC benefits, you must file form 1040 or 1040A and Schedule EIC. You may file under any status except "married filing separate." Taxpayers can have a maximum credit of $3,110. However, the average credit is about $1,000.

Single people or couples without children who earned less $9,230 and are at least 25 but under 65 can also qualify for EIC. You may file form 1040EZ along with Schedule EIC. The maximum credit is $314.

The Child and Dependent Care Credit is a non-refundable credit from (depending on income) 20 to 30% of the cost of day-care for a dependent. A dependent is any child under the age of 13 or any person with a disability of any age whom can be claimed as a dependent. Tax payers can claim up to $2,400 in costs for one dependent and $4,800 for two or more dependents. Only parents who work or were looking for work qualify for this credit.

Expenses for preschool and after school programs can qualify for the credit plus the costs associated with home care for your child, unless the tax payer gets reimbursed by a social services agency. Summer day camp expenses also qualify, but the IRS excludes overnight camp expenses.

To get the credit you must file for 2441 with your form 1040, identify the care giver and provide his or her Social Security number or Employer Identification Number.

For more information on the EIC and the Child and Dependent Care Credit check out IRS Publications 596 and 503. As with any tax related information, please be sure to verify this information with a tax expert. As we all know, the rules can be very complicated, and working with someone who knows the rules is best.

Reprinted with permission from "TECHTALK", a publication of the Illinois Assistive Technology Project, Jan/Feb 1996.