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Childcare expenses are incredibly crazy these days! I seriously don’t know how some families do it.     

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The child and dependent care credit was created to help families offset some of the cost associated with children and caring for a disabled dependent when both parents are employed outside of the home.

Quick guide to the child and dependent care tax credit for working parents. You may be surprised by what qualifies as a child care expense!

What is the credit? 

The credit is 20%- 35% of qualifying expenses depending on your AGI.

The maximum amount of the credit is $3,000 for one child or $6,000 for more than one child.

This credit is nonrefundable.

Check out my latest post -> Tax Credits vs. Tax Deductions -> to learn the difference between refundable and nonrefundable credits.

What are qualifying expenses?

Qualifying expenses include daycare, babysitter, after/before school care, summer camps (not overnight) or other care provider for a qualifying child under 13 or a disabled dependent.

Let me say that again- it’s not just for daycare.

You can also claim it on day camps and before/after school care! I believe these type of expenses are under utilized. This means you could potentially use this credit for 13 years!

Requirements

  • You and your spouse must have earned income for the year. There are exceptions for full-time students.
  • Care is provided so that both parents can work or look for work
  • Child must live with you for at least half the year
  • The provider can’t be your spouse, the child’s parent or person you claim as a dependent.

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How to file?

The credit is found on Form 2441: Child and Dependent Care Expenses.  

It’s an easy- straight forward tax form and your tax software will more than likely make it a piece of cake.

TurboTax -> Start by snapping a photo of your W-2, answer easy, non-tax questions about your life and we’ll help you get your maximum refund, guaranteed.

You will need to know the expenses paid for the tax year, address of the provider and their EIN. Normally daycare centers will provide you with an end of year statement with this information.

That wasn’t too bad, right?

I hope you can claim this credit on your 2018 tax return!  Interested in learning more about taxes? Grab a copy of my tax term cheat sheet and you will be one step ahead for this tax season!

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This blog is for informational purposes only. This is not intended to be personalized tax, legal or accounting advice.  You should always receive tax advice from someone who is familiar with your unique situation
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