To qualify for the child and dependent care credit, you must have a dependent child age 12 or younger, or a dependent of any age who cannot care for himself or herself. You calculate your tax credit on Form 2441 (PDF) and Instructions for Form 2441 (PDF).
In order to claim this tax credit, you must meet each of following criteria:
- Your child or dependent must meet certain qualifications,
- Your daycare provider must meet certain qualifications,
- You must have earned income,
- The care provided must enable you to work or to look for work, and
- You must reduce your eligible daycare expenses by any amounts provided by a dependent care benefits plan through your employer.
Qualifying Child or DependentThe child must be your dependent, age 12 or younger. If your child is age 13 or older, the child must be physically or mentally unable to care for herself or himself. You may also claim adult daycare expenses for a dependent age 13 or older or for a spouse, if that person is physically or mentally unable to care for himself or herself.
You must provide a home for the dependent, and pay over half the costs of maintaining a home for your dependent. You cannot claim childcare or adult daycare expenses for someone who does not live with you.
Normally, the child must also be your dependent. If the child is not your dependent solely because you allow the non-custodial parent to claim the child as a dependent, then you may be able to claim the child care credit even though you aren't claiming the child as your dependent. Only the custodial parent can take the child care credit, however. (See Publication 503 for more details about this exception.)
Qualifying Daycare ProviderThe person who provides childcare or adult daycare services cannot be one of your dependents. For example, you cannot pay your daughter to take care of her younger brother. If the daycare provider is your son or daughter, he or she must not be your dependent and must be age 19 or older by the end of the year. Also, your daycare provider must provide you with his or her name, business name (if applicable), address, and either Social Security or Employer Identification Number. Additionally, you must report this information on Form 2441 in order to claim the Child and Dependent Care Tax Credit.
Day camps may be qualified daycare providers, but overnight camps are not. In Publication 503, the IRS explains, "The cost of sending your child to an overnight camp is not considered a work-related expense. The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer."
How Much is the Child & Dependent Care Worth?The child and dependent care tax credit is worth 20% to 35% of your day care expenses. The percentage of the credit depends on your adjusted gross income. A full chart of the percentage rates is found in Publication 503.
Tax Forms and Instructions
- IRS Tax Form 2441 [PDF, 2 pages]
- Instructions for Form 2441
- IRS Publication 503, Child and Dependent Care Expenses
Tax Law Resources
- Internal Revenue Code section 21
- Treasury Regulations section 1.21-1, Expenses for household and dependent care services necessary for gainful employment
- Treasury Regulations section 1.21-2, Limitations on amount creditable
- Treasury Regulations section 1.21-3, Special rules applicable to married taxpayers
- Treasury Regulations section 1.21-4, Payments to certain related individuals