If you paid someone to come to your home to care for your child or other dependent, or you took them to a daycare facility so you could work or look for work, you may be able to take the credit for child and dependent care expenses on your U.S. federal income tax return. And, if you received dependent care benefits from your employer, you may be able to exclude them from your taxable income.
The credit for child and dependent care expenses is intended to help those who have a child or other dependent person to care for, and who must pay someone else to provide this care while they are working or looking for work. This credit should not be confused with the child tax credit. These are two different credits, with different qualifying criteria and different tax benefits. Taking one of these credits does not prevent you from taking the other.
You may be able to take the credit for child and dependent care expenses if you paid someone to care for your child under age 13 or your dependent or spouse who could not care for himself or herself. The credit can be up to 35% of your qualified expenses, and if you received any dependent care benefits from your employer, you may be able to exclude all or part of them. These dependent care benefits are reported in box 10 of Form W-2.
Tests to Qualify
All of the following tests must be met in order to claim the credit for child and dependent care expenses or the exclusion of dependent care benefits:
The care must be for your child under age 13, or your dependent or spouse who is physically or mentally unable to care for himself or herself. This person is called a qualifying person for purposes of this tax credit, and the tests to meet the criteria as a qualifying person are described below.
You (and your spouse if you are married) must keep up a home that you live in with the qualifying person(s).
You (and your spouse) must have earned income. But there is an exception if your spouse is a student or is unable to care for himself or herself.
You must have paid child and dependent care expenses so that you (and your spouse) could work or look for work. If you did not find a job and have no earned income, you cannot take the credit or exclusion.
The person you pay to provide child and dependent care services must not be someone you or your spouse could claim as a dependent on your tax return. You can pay your child to provide these services, but in this case your child must have been age 19 or older at the end of the year, and not claimed as your dependent.
Your filing status cannot be married filing separately, with certain exceptions. Generally, married couples must file a joint return to be eligible for the credit. But if you are legally separated or living apart from your spouse, you may be able to file a separate return and still take the credit. (See “Children of Divorced or Separated Parents” below).
You must identify the care provider on your tax return, with the person’s name, address, and taxpayer identification number (Social Security number). You can use Form W-10 to request the information from a care provider if you do not have it.
If you are excluding dependent care benefits provided by your employer, the amount you exclude must be less than the dollar limit for qualifying expenses.