The Child and Dependent Care Credit is a tax credit that provides financial relief to working parents and caretakers by reducing the amount owed in income tax. The maximum available credit is $1,050 of (35% of $3,000) for one child and $2,100 (35% of $6,000) for two children. The credit can only be claimed for the period of time that the care was provided while the taxpayer was working or actively looking for work.
Below is an overview of who can claim the credit and for what expenses qualify.
Qualifications for the child and dependent care credit
To qualify for this credit, you must meet all of the following:
- You (and your spouse, if you are married, filing jointly) must have earned income for the tax year.
- You must be the parent or primary caretaker of the child or dependent.
- The child or dependent care service must have been used so that you could work or look for work.
- Your filing status must be single, head of household, qualifying surviving spouse with a qualifying child, or married filing jointly.
- Your child or dependent must be under 13, but there is no age requirement if they are disabled and incapable of caring for themselves.
- The childcare provider cannot be your spouse, dependent, or child's parent.
Qualifying expenses for the child and dependent care credit
- A babysitter or licensed dependent care center provides childcare. The provider must furnish name, address, and SSN or EIN.
- The cost of a cook, housekeeper, maid, or cleaning person caring for the child or dependent for services performed in the taxpayer’s home.
- Day camp fees qualify if the camp was selected to provide care while the parent or parents were at work. Please note: Overnight camps do not qualify.
- Costs related to before and after-school care for children under 13.
- Costs related to a nurse, home care provider, or other care provider for a disabled dependent.
Special circumstances
Since every family is unique, the IRS has some exceptions to the rules.
- For divorced or separated parents, the custodial parent (the parent with whom the child stays for most nights out of the year) can claim the credit even if the other parent has the right to claim the child as a dependent due to the divorce or separation agreement.
- You can take the credit for the care of disabled adults even if you cannot claim them as a dependent.
- If your spouse is a disabled adult, the IRS waives the requirement for them to have earned income.
- If your spouse was a full-time student who attended college for at least five months out of the tax year, the IRS considers them to have earned income for each month they were a full-time student.