Parents and guardians often find themselves juggling their time between work and caring for their children or dependents. Most often than not, they need to hire extra hands to help them tend to the people they love, and its related costs can be significant. Thankfully, there is a tax credit that can help ease this financial burden. 

What is the Child and Dependent Care Credit? 

The Child and Dependent Care Credit (CDCC) is available to parents and guardians who employ care services for their children or dependents so they can work or find one. It aims to support them by reducing their tax liability dollar for dollar.  

How Much is the CDCC in 2024? 

For the tax year 2024, the child and dependent care credit is between 20 to 35% (depending on your Modified Adjusted Gross Income or MAGI) of up to $3,000 for one qualifying dependent or $6,000 for two or more qualifying dependents.  

The maximum care tax credit is $1,050 for one dependent and $2,100 for two or more dependents. 

How to Claim the CDCC 

To claim this tax credit, you need to attach Schedule 3 and IRS Form 2441: Child and Dependent Care Expenses to your 1040 return. You also need to meet the following requirements: 

• The care service must be work-related meaning it is a necessary expense so you can work or seek employment.  

• The care service provider must be identified on the tax return.  

• If you are married, you must also file a joint return to claim the care credit, otherwise you cannot claim it unless you qualify for an exception.  

• You must have earned income since this tax credit is non-refundable. 

Who May Qualify as a Child or Dependent 

A qualifying child or dependent is defined as any of the following: 

• A child under 13 years of age. If the child reaches the age limit during the tax year, you can still claim a tax credit for the care expenses incurred before the child’s 13^th birthday. 

• A spouse who is mentally or physically unable to care for themselves and has lived with you for more than six months during the tax year. 

• An individual whom you claim as dependent in your return, are mentally or physically unable to care for themselves, and has lived with you for more than half a year during the tax year. This may include parents, siblings, and other relatives. You may also claim individuals who would have been your dependent if not for the following reasons: 

1. They received gross income of $4,700 or more, 

2. They filed a joint return, or 

3. You, or your spouse if filing jointly, could be claimed as dependent on someone else’s return. 

Care expenses for newborn or newly adopted children can be included in the tax year they were born or adopted, even if they haven’t lived with you for more than half the tax year. 

Eligible Child and Dependent Care Expenses 

• All pre-kindergarten education such as nursery, preschool, or any other similar programs. 

• Care expenses for before- or after-school care of a child in kindergarten or higher level. 

• Cost of care provided for your dependents outside your home, such as neighbors or caregivers. 

• Payments to a dependent care center are eligible only if the center complies with all state and local regulations. 

• Day camps or summer camps may be eligible even if they specialize in a particular activity, such as computers, sports, or arts, as long as the main purpose of the camp is to provide care, and there are no overnight stays. 

• Transportation expenses paid by the care provider to take the dependent to the place where care is provided is also considered part of the care cost. 

• Application fees, deposits, agency fees, and other similar indirect costs that are necessary to get the care service are also eligible. 

• Household services that are at least partly for the well being and protection of the dependent, such as the services of a cook, babysitter, or housekeeper. 

You may also include payments to relatives for taking care of your dependent even if they are living in your home if he or she is not: 

• A person that you can claim as a dependent. 

• Your child under age 19 at the end of the year, even if he or she is not your dependent. This includes stepchild or foster child; 

• A person who was your spouse at any time during the year; or 

• The parent of your child under age 13. 

Want to learn more? 

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