Concise Takeaway
The Child and Dependent Care Credit is a nonrefundable credit for work‑related care expenses paid for a qualifying person so the taxpayer (and spouse, if married) can work or look for work. The maximum expenses allowed are $3,000 for one qualifying person or $6,000 for two or more.
Eligibility Requirements
To claim the credit, all of the following must be met:
- Filing status is single, head of household, qualifying surviving spouse, or married filing jointly
- Care is provided for one or more qualifying persons
- Taxpayer (and spouse, if married) has earned income
- Expenses are work‑related
- Payments are not made to:
- A spouse
- A dependent
- A child under age 19
- The parent of the qualifying person (if the qualifying person is the taxpayer’s child under 13)
- Care provider information (name, address, TIN) is included on the return
- If dependent care benefits are excluded from income, the exclusion must be below the expense limit
Qualifying Person Rules
A qualifying person is:
- A dependent under age 13, or
- A spouse or dependent who lived with the taxpayer more than half the year and is physically or mentally unable to care for themselves
A person is considered to have lived with the taxpayer all year if they lived there the entire time they were alive.
Physical or mental incapacity requires inability to care for hygiene, nutrition, or personal safety.
Joint Return Rules
Married taxpayers generally must file jointly.
A married taxpayer living apart from a spouse may file separately and still claim the credit if:
- They file a separate return
- Their home is the qualifying person’s home for more than half the year
- They pay more than half the cost of keeping up the home
- The spouse did not live in the home during the last six months of the year
Only the custodial parent may claim the credit.
Work‑Related Expense Rules
Expenses must allow the taxpayer (and spouse, if married) to work or look for work.
A spouse is treated as having earned income for any month they are:
- A full‑time student, or
- Physically or mentally unable to care for themselves
Deemed earned income:
- $250 per month for one qualifying person
- $500 per month for two or more qualifying persons
Expense Limits
Expenses used to compute the credit cannot exceed:
- $3,000 for one qualifying person
- $6,000 for two or more qualifying persons
- The taxpayer’s earned income
- The spouse’s earned income (if married)
Expenses for multiple qualifying persons may be combined in any proportion.
How the Credit Is Calculated
The credit equals:
Work‑related expenses × applicable percentage
The percentage:
- Starts at 35% for AGI under $15,000
- Decreases by 1% for each $2,000 of AGI
- Floors at 20% for AGI over $43,000
Maximum credit:
- $1,050 (35% of $3,000) for one qualifying person
- $2,100 (35% of $6,000) for two or more qualifying persons
Child and Dependent Care Credit Flow Summary
- Identify qualifying person(s)
- Confirm earned income and filing status
- Verify provider information
- Apply earned income and dollar limits
- Multiply allowable expenses by applicable percentage
- Claim the credit on Form 2441