Child and Dependent Care Expenses

To qualify for the child and dependent care credit your child or dependent and daycare provider must meet a few qualifications. Your child or dependent must be 12 years old or younger, and you must provide a home for this child or dependent. If your child is over 13 years old and is mentally or physically unable to care for themselves, please see information on Adult Daycare Expenses.

A qualifying daycare provider cannot be one of your dependents, and must be able to provide you with their name, address, and either social security number of employer identification number if applicable, you may gather this information having your care provider fill out form W-10. You will then report this information on form 2441 of your federal tax return.

Please be aware that in order to apply for this credit, you must also have earned income for the tax year. These child and dependent care expenses must have incurred so that you could work or look for work. If you were looking for work, but did not find a job and have no earned income, unfortunately you cannot use this credit.

Generally married couples must file jointly to apply for this credit, however if you are legally separated or living apart from your spouse you may be able to file separately and apply for this credit.

Note that if your employer provides dependent care benefits, you can exclude this amount from your tax return. However, this amount must be less than the dollar limit for qualifying expenses.

Qualifying expenses include household services such as babysitting and housekeeping. If your child or dependent is below the first grade, you may also claim the expenses of sending your child to an educational program. Expenses accrued during transportation of the dependent to and from their care location are NOT qualifying expenses.

Child care expenses are limited to $3000 for one dependent or $6000 for more than one. These expenses cannot exceed your earned income for the year. This credit is equal to 35% of the expenses, and this rate is reduced by 1% for every $2000 made above $15000 on your adjusted gross income, however this may not be reduced to lower than 20%.