What are the Requirements to Claim the Child Care Credit?
- You can claim the credit if you file taxes with a status of "single," "married filing jointly," "head of household" or "qualifying widow or widower." Married couples who file separate returns cannot take the child care credit. The child or children whose care expenses you are using for the credit must be claimed as a dependent on your return and, in most cases, must live with you for at least half the year. However, exceptions may apply to the children of divorced or separated parents; these are discussed in detail in IRS Publication 503 (see link in Resources).
- To qualify for the credit, your child-care expenses must have been necessary for you -- and your spouse, if you are married -- to either work or look for work. In other words, if you're sending your kids to day care just to get a little peace and quiet during the day, you can't take the credit. Further, both you and your spouse, if you have one, must have earned income during any year for which you claim the credit. Earned income is money from work -- wages, salaries, tips and self-employment -- not passive sources such as investments, interest, rental income and the like. For the purpose of these qualifications, a spouse who is a full-time student or is physically incapable of caring for himself is considered to be "working" and "earning income."
- The person you pay to care for your child cannot be anyone you can claim as a dependent on your tax return. You can pay one of your own children to care for another child -- but to claim the credit, the child you pay must be at least 19 years old and no longer your dependent. The paid caregiver also cannot be your spouse. And it cannot be a parent of the child if the child is under age 13. Whoever the caregiver is, you must identify that person by name, address and taxpayer ID number when you file your tax return.
- Only unreimbursed child-care expenses qualify for the credit. If your employer gives you a child-care subsidy of some kind, you must subtract that amount from your expenses before figuring the amount of your credit.
- If you meet the requirements for claiming the credit for child-care expenses, fill out IRS Form 2441 to determine the size of your credit, and attach the completed form to your tax return. When doing the calculations, however, you cannot claim more than $3,000 in expenses for one child, or $6,000 for two or more.