Child and Dependent Care Tax Credit: Eligibility Check

By | June 4, 2019

Child Care Tax Credit and Dependent Care Tax Credit Calculator

Individuals who spent money on day care for their kids or disabled adults may be eligible for a federal tax credit. The upper limit for this is 35% of the total expenditure on the day care.

Child and Dependent Care Tax Credit

Let us see in detail who is Eligible for federal tax limit

In order to get eligible for child and dependent care credit, you should have either a dependent child of age 12 or less or dependent of any age for that matter who cannot take care of themselves.

In order to claim tax credit one should meet the following criteria:

  • Child or dependent must meet few qualifications
  • The day care provider should also meet few qualifications
  • You yourself must have earned income
  • You must decrease your daycare expenses by an amount that is given by dependent care benefits plan via your employer

Eligible Child or Dependent

Eligibility of child or dependent is as follows:

  • The child should be 12 years or below and your dependent
  • Child of age 13 and above should be physically and mentally unable to take care of himself/herself
  • If an adult or spouse is also unable to take care of himself/herself then you can claim adult daycare expenses
  • You can only claim daycare expenses for child or adult who stays with you. You cannot claim expenses of one who do not live with you. You need to provide home to the dependent child or adult and pay over half the amount for maintaining the home.
  • In normal circumstances, the child must be your dependent. Custodial parent is only eligible for child care credit

Eligibility for Daycare Provider

Following criteria decide the eligibility of daycare provider:

  • Individual providing childcare or adult acre service cannot be dependent on you. For instance, if your elder kid takes care of your younger one and you pay him/her for this, you cannot calculate this amount for tax credit.
  • If your son or daughter is a day provider, he/she should not be dependent on you and should be 19 years or above.
  • A daycare provider should give you details like his/her name, business name, address Social security or Employer Identification Number. You need to fill in this information on Form 2441 if you wish to claim the child and dependent care tax credit.
  • Day camps get qualified for daycare providers but overnight camps do not. If you send your child to overnight camps that is not considered as work related expense. On the other hand sending one’s child to daycare expense is considered as work related expense. This camp can be specialized in any one activity too.

What is the worth of Child & Dependent Care Worth?

The tax credit for the child and dependent care is worth 20% to 35% of one’s daycare expenses. The adjusted gross income decides the percentage of credit.

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