The Child and Dependent Care Credit is a tax credit that reduces up to 35% of qualifying expenses related to childcare and dependent care. This credit is designed to give some financial relief to working parents and caretakers by reducing the amount of owed income tax and increasing their tax refund.
Below, you'll find an overview in who can claim the credit and for what kind of expenses. If you're looking for more details, you can read the current IRS guide.
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 main 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 widow or widower 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 or dependent or the child's parent.
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 the 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 because they have too much gross income or because you or your spouse can be claimed as a dependent by someone else.
- 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 that they were a full-time student.
Qualifying expenses for the child and dependent care credit
- Childcare provided by a babysitter or licensed dependent care center.
- The cost of a cook, housekeeper, maid, or cleaning person who provides care for the child or dependent.
- Day camp fees qualify if the camp was selected to provide care while the parent or parents were at work. *Note that 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.