If you paid for child care or dependent care so you (and your spouse, if filing jointly) could work or actively look for work, you may qualify for the Child and Dependent Care Credit.
To claim the credit, you must file Form 1040, 1040-SR, or 1040-NR and meet all IRS eligibility requirements. In addition, both you and your spouse, if filing jointly, generally must have lived in the United States for more than half the year.
Who Qualifies for the Child and Dependent Care Credit?
To claim the credit, you must meet all of the following tests:
Qualifying Person Test
Care must be provided to one or more qualifying individuals identified on Form 2441.
Earned Income Test
You must have earned income during the year. If you're married and filing jointly, your spouse must also have earned income unless a special exception applies.
Work-Related Expense Test
The care expenses must be necessary so you (and your spouse, if filing jointly) can work or actively look for work.
Care Provider Test
You must pay care expenses to an eligible care provider.
You can't claim expenses paid to:
- Your spouse
- The parent of your qualifying child if the child is under age 13
- Someone you can claim as a dependent
- Your child, unless the child was age 19 or older at the end of the year and isn't your dependent
Joint Return Test
Your filing status must generally be:
- Single
- Head of Household
- Qualifying Surviving Spouse
- Married Filing Jointly
If you're married, you typically must file a joint return unless you qualify for a specific IRS exception.
Provider Identification Test
You must provide identifying information for the care provider on your tax return.
Dependent Care Benefits Test
If you received dependent care benefits through an employer-sponsored plan, the amount excluded or deducted must be taken into account when determining your allowable credit.
Who Is a Qualifying Individual?
For purposes of the Child and Dependent Care Credit, a qualifying individual is generally:
- Your dependent child who was under age 13 when the care was provided
- Your spouse who was physically or mentally incapable of self-care and lived with you for more than half the year
- Another individual who was physically or mentally incapable of self-care, lived with you for more than half the year, and:
- Was your dependent, or
- Could have been your dependent except for certain IRS dependency rule limitations
How Much Is the Child and Dependent Care Credit?
The credit is based on your qualifying care expenses and your income.
Maximum qualifying expenses allowed:
- $3,000 for one qualifying individual
- $6,000 for two or more qualifying individuals
The credit is nonrefundable, which means it can reduce your tax liability to zero but won't increase your refund beyond any tax you've paid.
Depending on your income, the credit may equal 20% to 35% of your qualifying expenses.
For example:
- One qualifying individual with $3,000 of expenses may qualify for a credit ranging from $600 to $1,050.
- Two or more qualifying individuals with $6,000 of expenses may qualify for a larger credit based on the applicable percentage.
Our software automatically calculates the credit when you enter your qualifying individuals and care expenses.
Is There an Income Limit?
There's no income limit that prevents you from claiming the credit.
However, as income increases, the percentage used to calculate the credit decreases. Once your adjusted gross income exceeds the applicable threshold, the credit percentage reaches its minimum rate of 20%.
That means eligible taxpayers can still claim the credit, but the amount may be smaller at higher income levels.
How Do I Enter Child and Dependent Care Expenses?
To enter your child and dependent care information in the software:
- Go to Federal.
- Choose Deductions - Select My Forms.
- Credits
- Select Child and Dependent Care Credit.
- Enter your care provider information.
- Select the applicable Qualifying Person(s) section.
- Allocate the total care expenses among the qualifying individuals.
- Select Continue to save your information.
Once all information is entered, the software will automatically calculate your allowable credit.
What If My Provider Doesn't Have an SSN or ITIN?
If your child care provider doesn't have a Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN), you may still be able to claim the credit if you made a good-faith effort to obtain the information.
In that situation:
- Enter the provider's name and address.
- Keep documentation showing that you requested the provider's taxpayer identification number, such as a completed or attempted Form W-10 request.
- Prepare a statement explaining that the provider refused or failed to provide the number.
Important: Our software requires a valid SSN or ITIN to complete Form 2441 electronically. If the provider won't provide a taxpayer identification number:
- You must print and mail your return.
- Attach a written statement explaining the missing information.
- Keep records demonstrating your efforts to obtain the number.
If you don't make a reasonable attempt to obtain the provider's information, the IRS may deny the credit.
Entering Your Child and Dependent Care Expenses
When you've gathered your provider information and qualifying expenses, simply enter the details in the Child and Dependent Care Credit section. Our software will determine your eligibility, apply the correct limits, and calculate the maximum credit available based on your situation.