Tax credit for child care: how much it is per child and family?

If you are a working parent, and you have to pay for someone to look after your child or disabled dependent while at work, you might be eligible to take advantage of the child and dependent care credit. The credit allows you to claim a percentage of those out-of-pocket expenses to reduce your tax burden potentially quite significantly.

The child and dependent care credit is not refundable, which menas that it will reduce the amount you may owe in taxes when you file. But all families with children can access this credit because there is no income threshold. You, and if married your spouse, must have earned income with lower-income families able to claim a higher percentage of costs associated with the care of a child or a disabled dependent.

The Child and Dependent Care Tax Credit

The amount of the credit is based on a percentage of the child care expenses you incur on days worked to enable you and your spouse to earn income. The percentage ranges from 20% to 35% of expenses, depending on your income. Taxpayers with an adjusted gross income (AGI) $43,000 and up use the 20% amount and those with an AGI $15,000 use 35%. Those with AGIs between those two amounts use a percentage based on a sliding scale.

You can claim expenses up to $3000 for a qualifying child or other dependent under the age of 13, and $6,000 for two or more children. As well in the case that your spouse is disabled and physically or mentally incapable of caring for him or herself, or you have any disabled dependent who has income of less than $4,300 per year, you can also take advantage of this credit.

How to claim the child and dependent care credit

You must keep track of your receipts for expenses related to child care that you wish to claim. For a child dependent you can only claim expenses up to the child’s 13th birthday.

To claim the credit, you’ll have to list on your tax return the name, address, and Social Security number or Employer Identification number of the people you pay for dependent care, so you will need to have this information when preparing your income-tax filing. You must also file IRS Form 2441, Child and Dependent Care Expenses with your tax return.

The IRS has an online questionnaire you can complete to determine if you qualify for the child and dependent care credit. Visit the Am I Eligible to Claim the Child and Dependent Care Credit? page on the IRS website.

What you can claim for child and dependent care expenses

A fairly wide range of expenses can be claimed under the child and dependent care credit. They include the following:

There are some expenses that cannot be claimed. The caregiver cannot be a member of your immediate family, except under limited circumstances. Also school expenses for kindergarten and above do not qualify for the credit.

For a more complete rundown of the child care and dependent care expenses check the IRS Publication 503.