The information in this article is up to date for tax year 2024 (returns filed in 2025).
Who’s going to watch the kids while I go to work? That’s the million dollar question many parents ask themselves when school is out. While kids look forward to sleeping in, hanging out and staying up late, parents dread the idea of their kids tearing up the house or roaming the streets while they’re away. Why not pay someone to help? Not only will you be able to keep your sanity, but your expenses can be used to claim the Child and Dependent Care Credit on your next tax return.
How Does the Child and Dependent Care Credit Work?
If you pay to send your child to day camp, daycare or someone comes to watch them while you go to work, you can deduct up to $3,000 of expenses on your tax return under the dependent care tax credit. If you’re footing the bill for two or more kids, the limit rises to $6,000. You can claim any childcare expenses paid during the year but the kids must be under 13 years old. Depending on your income, the credit is worth 20-35% of your expenses.
Unemployed, but looking for work? The good news is you can still qualify if you’re paying for someone to take care of your kids while you go on interviews. The catch is that you have to make some money before the end of the year. Divorced or separated parents can also claim the credit, but there are special rules in IRS guidelines that address their unique situations.
To claim the expenses on a joint return, your spouse has to be working, looking for work or enrolled somewhere as a full time student. Spouses who are physically or mentally unable to care for themselves automatically qualify. If you are married filing separately, there are specific eligibility requirements and tax implications to consider, including how this status affects the maximum amounts allowed for dependent care benefits. See if you qualify!
Who Is Eligible for the the Child and Dependent Care Credit?
To be eligible for the Child and Dependent Care Credit, you need to meet specific criteria. First, you must have a qualifying dependent, such as a child under the age of 13, or a spouse or dependent who is physically or mentally incapable of self-care. Additionally, you must have earned income from a job or self-employment. This means that if you’re paying for child and dependent care expenses, it should be so you can work or actively look for work.
If you’re married, you generally need to file a joint tax return to claim the credit. However, if you are divorced or separated, there are exceptions that might apply. It’s also crucial to have a valid Social Security number or Individual Taxpayer Identification Number (ITIN) for both yourself and your qualifying dependent. Meeting these requirements ensures that you can take advantage of the dependent care credit on your tax return.
Types of Care That Don’t Qualify for the Credit
The following types of care don’t qualify for the credit:
- Overnight camp or summer school tutoring costs
- Care provided by your spouse, the child’s parent or one of your kids who’s under 19
- Care given by someone you claimed as a dependent
Claim your childcare expenses easily with ezTaxReturn. Start filing now!
What Information Do I Need From Childcare Provider?
Make sure you know the name, address and taxpayer ID number for the care provider because you won’t be able to cash in without it.
How Is the Child and Dependent Care Credit Calculated?
The Child and Dependent Care Credit is calculated based on your adjusted gross income (AGI) and the amount of care expenses you paid during the tax year. The credit is a percentage of your care expenses, ranging from 20% to 35%, with the percentage decreasing as your income increases.
To determine the exact amount of your credit, you’ll need to complete Form 2441, Child and Dependent Care Expenses, and attach it to your tax return. This form will require you to provide detailed information about your qualifying dependent and the care provider. By accurately filling out this form, you can ensure that you receive the maximum credit available based on your gross income and the expenses paid.
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Expenses that Qualify for the Credit
To qualify for the Child and Dependent Care Credit, the expenses you pay must be directly related to allowing you to work or look for work. Eligible expenses include:
- Daycare or preschool tuition
- Babysitting or nanny fees
- Before- or after-school program fees
- Summer camp or recreational program fees
- Care provider fees for watching your dependent in your home or in their own home
- Transportation costs for your dependent to and from care
However, not all expenses qualify for the credit. Non-qualifying expenses include:
- Child support payments
- Expenses for kindergarten or higher education
- Summer school or tutoring fees
- Food, lodging, clothing, or entertainment expenses for your dependent
- Expenses for care provided by a spouse or dependent who is under the age of 19 (or under 24 if a full-time student)
If you’re ready to file your taxes and claim any eligible childcare expenses, let ezTaxReturn make the process easy and stress-free. We’ll guide you through every step, ensuring you maximize your deductions and get your refund fast.
The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
