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My son is diagnosed with hypotonia which means low muscle tone. He also has global developmental delay. He is 21 months old but behaves acts like 12 months. He is constantly improving but he is behind his development.

Questions

1) In order to be qualified for child tax credit, do both parents need to work?

2) there is a $5K child care credit, but should both parents have to work to be qualified?

3) is there such a thing as a tax credit or deduction for child disability?

Thanks

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One of the better write-ups on the topic.
http://www.journalofaccountancy.com/issues/2013/jun/20137378.htm...

The following covers the main considerations of the $5k dependent care credit. Page 6 deals with both parents generally needing to work, be looking for work, or be a full-time student.
https://www.irs.gov/pub/irs-pdf/p503.pdf

Good luck.

1. no you both don't have to work to get the general child tax credit but it does phase out with high income.
2. Yes both parents have to work for the child care credit
3. there isn't a general credit or deduction, though you may be able to deduct some qualified expenses such as special school or medical (like mentioned in the article jarfykk linked)

jerosen said:   1. no you both don't have to work to get the general child tax credit but it does phase out with high income.
2. Yes both parents have to work for the child care credit
3. there isn't a general credit or deduction, though you may be able to deduct some qualified expenses such as special school or medical (like mentioned in the article jarfykk linked)

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2. I work full time and my wife takes care of my son. But on the side i setup a home business where we both work from home.

How many hours does she have to put in this home business to be qualified for child care credit? I am planning to send him to Montisserie soon maybe 2,days in a week because he is in therapy 3,days a week

fleetwoodmac said:   
jerosen said:   1. no you both don't have to work to get the general child tax credit but it does phase out with high income.
2. Yes both parents have to work for the child care credit
3. there isn't a general credit or deduction, though you may be able to deduct some qualified expenses such as special school or medical (like mentioned in the article jarfykk linked)

--------

2. I work full time and my wife takes care of my son. But on the side i setup a home business where we both work from home.

How many hours does she have to put in this home business to be qualified for child care credit? I am planning to send him to Montisserie soon maybe 2,days in a week because he is in therapy 3,days a week

  
From the IRS doc : https://www.irs.gov/pub/irs-pdf/p503.pdf
says this : 
"Part-time work. If you work part-time, you generally must figure your expenses for each day. However, if you have to pay for care weekly, monthly, or in another way that includes both days worked and days not worked, you can figure your credit including the expenses you paid for days you did not work. Any day when you work at least 1 hour is a day of work."

How does the Montessori school charge?   You may be able to deduct the whole thing as long as your wife works 1 hour a day during his care.

 

fleetwoodmac said:   
3) is there such a thing as a tax credit or deduction for child disability?

Thanks

  No. However, medical expenses in excess of 10% of AGI are deductible. But you can fund a Medical Spending Account (or an HSA depending on your health insurance) to plan for expenses. 

Pobre said:   fleetwoodmac said:   
3) is there such a thing as a tax credit or deduction for child disability?

Thanks

  No. However, medical expenses in excess of 10% of AGI are deductible. But you can fund a Medical Spending Account (or an HSA depending on your health insurance) to plan for expenses. 


Thanks

So the question comes down.to this

If I transfer the company to my wife then i can deduct $5k as dependent care. But then she has to pay 12.4% soc sec tax. If she does not pay into soc sec she would get half of my soc sec check anyway.

Considering tge fact that the business is set to grow, what route i should take? Transfer the.company to wife or not? Which nakes sense in the long term?



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