For many working parents, paying for childcare is simply a fact of life. But a portion of those expenses could actually qualify for a federal tax credit and lower your taxes. Here is everything you need to know to claim the Child and Dependent Care Tax Credit on your 2022 tax return.
How much is the Child and Dependent Care Credit worth?
For tax year 2022 (the return you’ll file in 2023), the Child and Dependent Care Credit is worth up to 35% of qualified childcare expenses. The maximum amount of qualifying expenses you can claim is $3,000 if you have one dependent. For two or more dependents, the maximum amount you can claim is $6,000.
Note: Everyone’s tax filing situation is different, and the actual percent you can claim will depend on your adjusted gross income (AGI).
If you’re filing for tax year 2021, the credit is worth up to 50% of qualifying expenses. The maximum amount if $8,000 for one child and $16,000 for two or more dependents. In 2021 the credit also begins to phase out if your AGI is greater than $125,000 and completely phases out for those with an AGI greater than $438,000.
If you’re filing a prior year return for tax year 2020 or earlier, the tax credit is worth 20-35% of qualified care expenses. The amount of expenses you can claim is $3,000 if you have one dependent or $6,000 if you have two or more.
Is the Child and Dependent Care Credit Refundable?
For 2022 taxes (returns filed in 2023), the credit is nonrefundable.
For 2021 taxes (returns filed in 2022), the credit is refundable. The credit will apply to your tax bill if you owe taxes. If you don’t owe taxes, any remaining tax credit will be added to your tax refund. Learn how refundable credits work.
How old can my children be to be eligible?
You can claim the credit for any and all children under the age of 13.
Can I get the credit if I am a single parent?
Yes, single filers can claim the Child and Dependent Care Credit. It’s important to note that if you are co-parenting, only one of you may claim the child for tax purposes. Read also: Co-parenting? How Child Support and Custody Affect Your Taxes
If you are married, you have to file a joint return to take the credit. You won’t be eligible if you are married and filing separately.
Can I get a tax credit for daycare if I am a stay-at-home parent?
Probably not. To qualify for the credit, you (and your spouse if you are married) must be working, looking for work, or enrolled in school full time.
What is the minimum income required to get the child care credit?
The IRS says that you must have earned income for the year, but there is no minimum required. Income can include wages, salaries, tips, and net earnings if you are self-employed.
What type of child care expenses can I claim for taxes?
The kinds of paid care that qualify for the Child and Dependent Care credit include day camp, daycare, or in-home care provided by a babysitter (including relatives, as long as you pay them).
Overnight camp, tutoring, or child care provided by someone you claim as a dependent (an older sibling, for example) do not count toward the credit.
Does the Child and Dependent Care tax credit apply for private school expenses?
Probably not. School tuition for private kindergarten or higher is not considered “expenses for care” by the IRS, and would not qualify for the Child and Dependent Care Credit.
How do I claim the Child and Dependent Care Credit?
You’ll have to report the name, address, and SSN or EIN of the care provider to claim the credit, so be sure to keep good records and hang on to your receipts.
To claim the Child and Dependent Care Credit, you’ll need to fill out Form 2441, Child and Dependent Care Expenses. TaxSlayer will provide step-by-step instructions to help you complete the form, and it will be attached to your return when you submit it to the IRS.
This article was last updated on December 22, 2022.