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Child and Dependent Care Credit

What is the child and dependent care credit?
Do I qualify?
What paperwork do I need?
Related deductions and credits
More information

What is the child and dependent care credit?

If you paid someone to care for your child (or your disabled spouse or dependent) while you work, you might be eligible to receive a tax credit. The credit is a percentage of your child or dependent care expenses and varies depending on your adjusted gross income (AGI). You can receive up to $1,050 per child or dependent with a maximum credit of $2,100.

Do I qualify for the child and dependent care credit?

Eligibility requirements

- You (and your spouse, if married) must have earned income, such as from a job or your own business.

- The child or dependent care was provided so you (and your spouse if you're married) could work or look for work. Your spouse is treated as working if he or she was a full-time student or unable to care for himself or herself.

- The person receiving the care was age 12 or under or qualified as mentally or physically disabled.

- The person receiving the care must have lived with you for more than six months of the tax year.

- You can claim expenses used to care for your child or dependent, such as day care, and nursery school costs, wages paid to a household employee (such as a nanny), and payments to a babysitter, maid, or cook if the payments are made for your child or dependent's well being.

Limitations of this credit

- You can claim up to $3,000 in expenses per dependent with a maximum of $6,000 in expenses for two or more dependents.

- The credit is a percentage of your expenses, where the percent varies depending on your adjusted gross income (AGI). The higher your income is, the lower the percentage is for calculating your credit.

Example: If you earned $40,000, the percentage used to calculate your credit is 22%. If you had $3,000 in child care expenses, your credit is $660 (22% x $3,000 = $660). TurboTax makes this calculation for you.

- The credit is limited to the amount of taxes you owe on your return. That means if the credit is bigger than what you owe in taxes, the credit reduces your taxes to zero and the remainder is lost.

Example: If you owe $375 in taxes and you receive a dependent care credit of $500, the credit reduces your tax to zero on this year's return and the remaining $125 is lost. You won't receive a refund for the remaining $125.

- You cannot claim child and dependent care expenses if your care provider is someone you can claim as a dependent.

- You cannot claim child and dependent care expenses if your care provider is your child who is age 18 or under at the end of the tax year.

- You must have the Social Security number or Employer Identification Number (EIN) for each care provider. Without it, you cannot claim the credit. (This is so the IRS can make sure the care provider claims the correct amount of income.)

- You cannot claim the cost of overnight camps and schools as a valid dependent care expense. You can, however, claim the cost of day camps.

Special circumstances or exceptions

- If you received dependent care benefits from your employer (through a pre-tax dependent care benefit plan), TurboTax reduces the expenses that you claim by the reimbursements from your employer's dependent care plan. TurboTax calculates this for you.

Example: If you had $3,000 in expenses and received $1,000 from your employer's dependent care plan, then TurboTax applies only $2,000 of your expenses toward the credit.

Note: If your employer provided child care at your workplace or directly paid your day care provider, enter zero when TurboTax asks for your dependent care expenses. In addition, if you had dependent care expenses over and above what is indicated in box 10 of your Form W-2, enter those expenses when TurboTax prompts for dependent care expenses.

- If one spouse is a full-time student or disabled, earned income for that person is set at $250 per month. If both of you are full-time students or disabled, your earned income is set at $500 per month.

- If you are married but not filing a joint return, then you can file a separate return and still take the credit if the child or dependent lives in your home for more than six months of the year and your spouse didn't live in your home for the last six months of the year.

TurboTip: If you and your spouse were divorced, legally separated, or lived apart the last six months of the year, then you can qualify even if the child is not a dependent on your tax return. To qualify in this scenario, you must be the parent whom the child lived with (the "custodial" parent). The noncustodial parent can claim the child as a dependent (according to the rules for the dependent exemption) while you claim the child and dependent care credit.

What paperwork do I need for the child and dependent care credit?

To claim this credit, you'll need:

- The Social Security number and expenses incurred for each child or dependent you are claiming

- Each child care provider's name, address, and tax ID number or Social Security number, plus the amount paid to the provider

- Reimbursements received from your employer's dependent care benefit plan as shown in box 10 on your Form W-2

For your records:

- Receipts or cancelled checks for your child or dependent care expenses

Deductions and credits related to the child and dependent care credit

- Dependent Exemption
- Child Tax Credit
- Earned Income Credit

More information about the child and dependent care credit

For more information, see:

- IRS Publication 503, Child and Dependent Care Expenses
- IRS Publication 17, Chapter 32, Child and Dependent Care Credit