I'm trying to squeeze more out of my paycheck. I know I can but I'm trying to figure out just how much. I'm currently claiming single and zero but the kids live with me now and this year I'll be able to claim them. I used this calculator in determining the numbers (http://www.irs.gov/individuals/page/0,,id=14806,00.html
) but I just wanted confirmation that my thoughts were correct.
I make $74,500 gross. My federal tax each week is about $290. Running the numbers on the IRS calculator, at this rate I would pay $13,930 in federal tax and get back $1,760 or $34/wk in each paycheck if I wasn't able to claim the kids.
Same scenario but with claiming the kids (HOH + 3) and no extra deductions. I would get back $6,628 or $127/wk in each paycheck.
This is where I get confused. "Child and dependent care credit" My kids are 8 and 9 and I have a sitter watch them three hours before school when I'm at work. I pay the sitter with checks every week but she doesn't have a tax ID. Can I use this credit?
Same scenario as claiming HOH + 3 and using the child care credit. I'll pay approximately $6500 for child care in 2012. I would get back $7,829 or $150/wk in each paycheck.
Same scenario as above but now with the child tax credit. I would get back $9,829 or $189/wk in each paycheck.
My effective tax rate, with the deductions above, would drop from about 17% to about 6% and instead of paying about $12,170 I would pay about $4100 in federal tax. Is there something I'm missing here or is it pretty cut and dry like the numbers above show?
Regarding the dependent care credit, with my current CS, NJ isn't responsible for child care expenses. In my state, they add the child care expenses into CS. In other words, my CS is $400 but if child care was to be added the CS amount would be $520. My day care expenses are about $6500. NJ's portion would be about $1625. Would there be a significant difference (bottom dollar amount) if NJ paid a portion or not when it comes to filing my taxes next year?
I know it's confusing because I don't understand the tax code that much myself.