Child and Dependent Care Tax Credit

Did you know that you can get part of your child care expenses reimbursed with the Child and Dependent Care Tax Credit?

This tax credit will help you pay for care for your dependents while you work.


Whose care can you deduct?

The dependent care credit can be taken for:

  • Your qualifying child who is also your dependent. The child must be under age thirteen at the time the care was provided. If you are the child's custodial parent and are separated or divorced from the child's other parent, you can claim the credit even if the other parent claims the child as a dependent. The non-custodial parent cannot claim this credit for the child even if he claims the child as a dependent.
  • A disabled person who cannot physically or mentally care for him/herself who is your spouse or dependent.

What other qualifications must you have?

  • The care must be provided so that you should be able to work or be looking for work.
  • You must have earned income.
  • The two points mentioned above must be true for your spouse, too, if you are married filing a joint return. However there is an exception if one spouse is either a full-time student or is physically or mentally not able to care for him/herself.

How much is the credit?

The dependent care tax credit is calculated by a certain percentage depending on your taxable income. It can be 35% but it will become lower as your income rises.

The base amount that is used to calculate the credit is the lower one of:

  • your earned income
  • your spouse's earned income (if married filing jointly)
  • The amount paid for qualifying care - this is limited to $3000- if you paid for one child and $6000- if you paid for two or more children.

For every month that one spouse was a full-time student or disabled the earned income is considered to be $250 for that month (if you paid for two or more children it will be $500- per month.)

Sounds complicated?

See our Child Care Tax Credit Calculator to help you figure out what your credit amount will be.

Please note: It is a non-refundable credit meaning that it is limited to the amount of tax owed.

Whom can the expenses be paid to?

You can include expenses that were paid to an individual or organization. You must provide a tax ID of the care provider unless it is a tax-exempt organization.

Here is a list of individuals who cannot be the care provider:

  • Your dependents
  • Your spouse
  • The parent of the child
  • Your child under age 19

What expenses are included in the care?

To qualify for the Child and Dependent Care Tax Credit the expense must be primarily for the care of the qualifying person.

You cannot include amounts paid for food, lodging, clothing, education, and entertainment, unless it is a small amount and you cannot separate them from the qualifying care.

Can you include the amount paid for school since the school provides care while you work?

Depends on the age and grade of the child.

For children age kindergarten and above schooling is considered mainly education so you cannot include it as qualifying care. But for younger children in preschool or nursery school, it is considered childcare.

Day camp or summer school is a qualifying expense since it is not considered primarily education. Overnight camp however does not qualify.

Here are a few more things that can be included:

  • Transportation provided by the care provider to and from the place of care.
  • Fees that you had to pay to be able to get care.
  • Housekeeping services that is necessary to run the home where the care is provided.

Child and Dependent Care Credit Calculator

Here is a calculator that will help you estimate the amount of child care tax credit you will get. We have a separate table for married filing jointly and one for single and other filing statuses.

Child Care Credit Calculator for Married Filing Jointly

Taxpayer Income

$

Spouse Income

$

Child Care

$

AGI

$

Children

Taxpayer was a student or disabled for:


months

Spouse was a student or disabled for:


months

www.your-tax-help-expert.com Copyright 2012

Child Care Credit Calculator for Single Filing Statuses

Taxpayer Income

$

Child Care

$

AGI

$

Children

www.your-tax-help-expert.com Copyright 2012

Do you need more info about the Child and Dependent Care Tax Credit?

See the following sources:

Form 2441

Publication 503

Updated November 20, 2012

Go To Child Tax Credits



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How much will you get for the Child and Dependent Care Credit?

Check out this new calculator, to see how much your credit will be.

For more information or to see if you are eligible see the Child and Dependent Care Credit page.


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