The information in this article is up to date for tax year 2023 (returns filed in 2024).
For many working families, the cost of childcare is a huge financial burden. According to Care.com, parents spend an average of $321 per week on daycare costs. That’s almost $1,300 per month or $15,000 for the year. Ouch! Although your wallet may be crying now, you’ll be smiling from ear to ear when you file your federal tax return. That’s because you may be eligible for the Child and Dependent Care Credit. The credit can help you get back some of the money you spent on childcare and reduce your tax bill by thousands of dollars.
What is the Child and Dependent Care Credit?
The Child and Dependent Care Credit is a tax credit you may be able to claim if you paid someone to care for your child or dependent with disabilities while you worked or looked for a job. Qualifying expenses include daycare, preschool, before and after school care, dependent care center, day camp and more. For a complete list of qualifying expenses, see IRS Publication 503.
Who is a qualifying child for the dependent care credit?
You must have a qualifying dependent to claim the credit. The IRS defines this as:
- A child under the age of 13 who is your dependent
- A spouse who is mentally or physically unable to care for themselves and lived with you at least six months
- An individual who is physically or mentally unable to care for themselves, lived with you more than six months and was either your dependent or would’ve been your dependent if their income didn’t exceed $4,700; or they filed a joint tax return; or you can be claimed as a dependent on someone else’s return.
How much is the Child and Dependent Care Credit worth?
For tax year 2023, the credit is worth between 20 to 35% of your childcare expenses depending on your adjusted gross income (AGI). You can claim up to $3,000 in expenses for one child and $6,000 for two or more children. In other words, the maximum amount you can receive is $1,050 for one child and $2,100 for two or more children. Use the chart below to estimate your credit. Simply multiply your childcare expenses by the percentage associated with your AGI.
| Adjusted Gross Income | Percentage |
|---|---|
| $0 – $15,000 | 35% |
| $15,001 – $17,000 | 34% |
| $17,001 – $19,000 | 33% |
| $19,001 – $21,000 | 32% |
| $21,001 – $23,000 | 31% |
| $23,001 – $25,000 | 30% |
| $25,001 – $27,000 | 29% |
| $27,001 – $29,000 | 28% |
| $29,001 – $31,000 | 27% |
| $31,001 – $33,000 | 26% |
| $33,001 – $35,000 | 25% |
| $35,001 – $37,000 | 24% |
| $37,001 – $39,000 | 23% |
| $39,001 – $41,000 | 22% |
| $41,001 – $43,000 | 21% |
| Over $43,000 | 20% |
Don’t worry! When you do your taxes with ezTaxReturn, we crunch the numbers and fill out the appropriate forms for you. Just enter your childcare expenses and let us do the hard work.
How to claim the Child and Dependent Care Credit
To claim the Child and Dependent Care Credit, you must complete Form 2441 and send it with your Form 1040. Want a fast and easy way to do your taxes? Look no further than ezTaxReturn! We’ve helped millions and millions of taxpayers file fast, easy and stress-free for 24 years.
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.
