Most of us work and we pay someone to take care of our children while we are at work. When this happens, you may be able to use those expenses to claim the child and dependent care credit.
Depending on your income, you can claim a credit of up to $1,050 if you have one qualifying dependent or $2,100 if you have more than one. The qualifying dependent must either be a child under the age of 13 or an individual at any age but are not able to physically or mentally care for themselves and must lived with you for at least half of the year.
Child and dependent care expenses must be work-related to qualify for the credit. Expenses are considered work-related only if both of the following situations apply:
- These expenses allow you (and your spouse if filing joint) to work or look for work
- These are for a qualifying individual’s care
Types of Expenses That Are Allowable
Education – expenses for a child in a program below the kindergarten level such as nursery school or pre-school qualifies for the credit.
Dependent Care Center – is a place that provides care services for at least seven people (other than the people that live in the center). These expenses qualifies if the center complies with all state and local regulations that apply to these centers.
Camp – the cost of sending your child to a day camp may qualify, even if the camp specializes in a particular activity such as music or baseball. However, any expense incurred to send a child to an overnight do not qualify for the child care credit.
Transportation – the cost of taking a qualifying individual to or from a place where care is provided which includes a bus, subway, taxi or private car. For it to qualify, the transportation service must be provided by the care provider. If you pay the transportation cost for the care provider to come to your house, the expense does not qualify and therefore not allowable.
Fees and deposits - fees paid to an agency to get the services of the care provider, deposits paid to an agency or preschool, application fees and other indirect expenses qualify for the credit if you have to pay them to get care.
Household Services – are ordinary and usual services done in and around your home that are necessary to run your home. These expenses qualify for the credit if these are at least partly for the well-being and protection of the qualifying individual. Examples of these services are services by maid, cook, or housekeeper but does not include the services of gardener, chauffeur, or bartender.
Payments to relatives or dependents – expenses paid to relatives who are not your dependent, even if they live in your house, count towards the credit. However, payments made to a dependent for whom you can claim an exemption, your child under the age of 19 at the end of the year, or the parent of your qualifying individual if the qualifying individual is your child under the age of 13 DO NOT qualify towards the credit.
Source: Publication 17, Publication 503