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What is Child and Dependent Care Credit?

Some people are confused between dependent deduction vs child care credit. Others are confused between child tax credit and child and dependent care tax credit. We will discuss child and dependent care credit below. Child and Dependent Care tax credit is a nonrefundable tax credit. You will need to complete a child and dependent care tax credit worksheet to calculate your child and dependent care credit amount. Note that child tax credit is not the same as the child and dependent care tax credit.

What is Child and Dependent Care Credit?

If the taxpayer pays someone to care for a dependent who is under age 13 or for a spouse or dependent who is not able to care for himself or herself, then the taxpayer may qualify for a child and dependent care tax credit. The taxpayer must pay these child and dependent care expenses in order to work or look for work to qualify.

How much is the maximum amount for child and dependent care tax credit?

If the taxpayer qualifies, the child and dependent care tax credit can be up to 35% of the expenses incurred for child and dependent care.

What is the dollar limit for the amount used to calculate the child and dependent care credit?

The dollar limit on the amount of work related expenses that can be used to calculate the child and dependent care credit is:

  • $3,000 for one qualifying person, or

  • $6,000 for two or more qualifying persons
How to claim the child and dependent care tax credit?

To calculate the child and dependent care tax credit, the taxpayer should use:

  • the IRS tax form Schedule 2 called the Child and Dependent Care Expenses for Form 1040A Filers or

  • the IRS tax form 2441 called Child and Dependent Care Expenses (Form 1040)

All qualifying requirements must also be met for the taxpayer to be eligible to claim the child and dependent care tax credit. We discuss the requirements for eligibility for claiming the child and dependent care tax credit in another section.

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