What is the Child and Dependent Care Credit?

Posted by Kristen on February 27, 2013

What is the Child and Dependent Care Credit?

  • The Child and Dependent Care Credit is a nonrefundable tax credit available to qualifying individuals who have paid costs for child care or care for a dependent within the same year.
  • The payments must be made to a care provider. This cannot include your spouse, other children, or any of your dependents that may be providing care.
  • The total expenses that qualify for the credit are limited to $3,000 for one child or $6,000 for two of more children.

When and Where is the Child and Dependent Care Credit Used?

  • If you paid for the care of your child, you can qualify for this credit. Children qualify if they are under the age of 13-years-old.
  • If your spouse or other dependent is physically or mentally unable to take care of themselves, you may qualify for the cost of care.
  • You will need to reduce the credit by any amount of dependent care benefits that are provided by your employer.
  • You may only qualify for this credit if you are a custodial parent. Even if you are a noncustodial parent claiming an exemption for the child or children, you cannot qualify for this credit.
  • You can only qualify for this credit if you paid for care while you or your spouse was working or looking for work.

Child Dependent Care Credit

  • The expenses claimed can’t be more than your earned income unless you or your spouse are a full-time student.
  • If you’re married, you must file jointly.
  • To claim this credit, you can use Form 2441 on 1040 or 1040a.

More Tax Topics for Parents

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