Child And Dependent Care Tax Credit: How To Claim It

As parents well know, child care can be almost prohibitively expensive. U.S. families spend up to $15,600 a year on day care — and that’s for just one child — according to a 2024 analysis of 2022 data, the most recent available, by the U.S. Labor Department.

The federal government helps defray at least some of those costs with the child and dependent care tax credit, which is currently worth up to $1,050 for some taxpayers with one child or dependent, and up to $2,100 for some taxpayers with two or more children or dependents.

The exact amount of the credit depends on your adjusted gross income (AGI) — the higher your income, the smaller the tax credit.

Here’s what you need to know about how the child and dependent care tax credit works, who qualifies and how much you could receive to help offset the cost of spending thousands of dollars each year on child care.

What is the child and dependent care tax credit?

The child and dependent care credit is a tax break to help cover families’ child care expenses, so they can continue working or searching for employment. That work could be for your own business, as well as both full- and part-time jobs.

Be careful not to confuse the child and dependent care tax credit with the child tax credit, which is not tied to a specific type of spending. You can claim both the child tax credit and the child and dependent care tax credit in the same year. (Consider the earned income tax credit, too.)

The amount of the child and dependent care tax credit you’re eligible to claim is a percentage of the expenses you paid to a care provider, depending on how many dependents you have and your household’s adjusted gross income (AGI). Qualified taxpayers can claim 20 percent to 35 percent of care expenses, up to a limit of $3,000 of expenses for one child or dependent and up to $6,000 for two or more children or dependents.

The “work-related” qualifier is key. Paying for babysitting or child care expenses to take a vacation, for example, wouldn’t be considered a qualifying expense.

There’s no income limit to be eligible for the credit. Also, the credit isn’t refundable. That means it can reduce your tax bill to zero, but you don’t get any money back as a refund from this credit.

Who can claim the child and dependent care tax credit?

To qualify for the child and dependent care credit, families must have:

• a qualifying child or dependent;

• child care expenses that were incurred to work or look for a job;

• a jointly filed tax return if you’re married, unless you’re considered legally separate; and

• earned income during the tax year.

Read on for details on each requirement to qualify for the child and dependent care tax credit.

Qualifying child or dependent

Your child care expenses must be related toward caring for children who are younger than 13 years old.

In special circumstances, though, taxpayers can claim expenses for caring for individuals older than 13 if they’re considered physically or mentally incapable of providing their own care and live with you for more than half of the year, according to the IRS. Those could be your dependents, as well as a spouse.

See IRS Publication 503 for more details on the definition of a qualifying child or dependent.

Child care expenses

Caregiving expenses that you can claim include the cost of putting your child in daycare, preschool, day camp and nannying arrangements.

Caretaking can be provided both outside or inside your home, but you’ll have to provide the IRS with documentation — usually the caregiver’s name and individual taxpayer identification number (ITIN), which is often their Social Security number.

You can even pay relatives to take care of your children, as long as they’re not:

• Younger than age 19 when they provided that care;

• An individual who you or your spouse can claim as a dependent;

• Someone who was your spouse at any time during the past year; or

• The parent of your qualifying dependent.

Taxpayer filing status

Married taxpayers must file a joint return to claim the credit, unless they’re considered legally separated or living separate from their spouse — distinctions that would lead the IRS to classify a taxpayer as “unmarried.” Generally, a couple who files as “married filing separately” is ineligible for this tax credit, but read IRS Topic No. 602 for more details.

Earned income

Wages, salaries, tips or other forms of pay where federal income taxes are withheld count as earned income, according to the IRS.

But that’s where one of the tricky qualifications occurs. The IRS lets taxpayers claim child care expenses that they incurred while looking for work, but if you don’t find a job and thus have no earned income for the year, you can’t claim the credit.

How much is the child and dependent care credit worth?

How much you receive depends on how much you spent during the year on work-related child care. Taxpayers with one child can claim up to $3,000 of qualifying expenses, while those with two or more children can claim up to $6,000. The credit is worth 20 percent to 35 percent of what you paid for qualifying child care expenses, depending on your income.

To qualify for the 35 percent credit — and thus get the maximum $1,050 credit for one child or $2,100 credit for two or more children — taxpayers must have adjusted gross income (AGI) of $15,000 or less.

The percentage decreases as AGI increases. Taxpayers with AGI of $43,000 or more receive a tax credit of 20% of qualifying expenses up to $3,000 (or $6,000 for two or more children or dependents).

Here’s the maximum tax credit for 2024 tax returns, filed in 2025, for two different levels of adjusted gross income: AGI up to $15,000 and AGI of $43,000 or more:

How the credit is phased out

The more money you make, the smaller the tax credit you’ll receive.

The 35 percent maximum rate phases out once a taxpayer earns more than $15,000 a year, until it reaches 20 percent when a household makes $43,000 or more in adjusted gross income. That means all taxpayers whose incomes are above that threshold would receive a maximum of $600 in tax credits if they have one child or $1,200 if they have two or more children.

Here’s how the phase-out works:

Does contributing to a workplace FSA plan affect the credit?

Some employers let workers contribute funds tax-free to a flexible spending account (FSA) specifically for child care. That money is already getting a tax benefit, and the IRS won’t let you double-dip, meaning the FSA funds that you used to cover a work-related child care expense can’t count toward the child care tax credit.

But you can deduct the difference. Say you spent $11,000 in 2024 on child care for your two children, and you covered $5,000 of those expenses with your FSA funds. You could claim the remaining $6,000 in expenses on your taxes. If your AGI is $43,000 or more, that means a maximum tax credit of $1,200.

Here’s how to claim the credit on your tax return

Taxpayers have to complete Form 2441, and file it with their federal income tax return, to claim the child and dependent care tax credit.

On Form 2441, the IRS asks for information about qualifying caregivers, including their Social Security or ITIN numbers, their address, whether they work as your household employee and the total amount that you paid them.

All of that means you’ll want to keep careful track of how much you spent on work-related child care in any given tax year. Most businesses should send you all of the information that you need at the end of the year, but individually employed nannies, relatives or caregivers might not. Even so, tallying for yourself how much you spent can help ensure that you don’t leave any money on the table.

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