What is the Dependent Care Credit?​

  • A nonrefundable federal tax credit for work-related child or dependent care expenses
  • Designed to allow you (and your spouse, if married) to work or look for work
  • Reduces tax owed (does not create a refund by itself)
 
Who qualifies as a “qualifying person”?
  • A child under age 13 at the time care was provided
  • A spouse who is physically or mentally incapable of self-care and lived with you more than half the year
  • A dependent who is physically or mentally incapable of self-care and lived with you more than half the year
 
What expenses qualify?
  • Daycare, preschool, before/after school care
  • Summer day camp (not overnight camp)
  • Nanny or in-home care
  • Care for a disabled spouse or dependent
  • Expenses must be work-related
  • Must be incurred to allow you (and spouse, if married) to work or look for work
 
What expenses do NOT qualify?
  • Overnight camps
  • Kindergarten or higher grade tuition
  • Education expenses
  • Food, clothing, or entertainment (unless incidental to care)
  • Payments to your spouse, the child’s parent, your dependent, or your child under age 19
 
How much of my expenses qualify?
  • Up to $3,000 of expenses for one qualifying person
  • Up to $6,000 for two or more qualifying persons
  • Limited to the lower of:
    • Your earned income
    • Your spouse’s earned income (if married filing jointly)
 
What percentage do I get as a credit?
  • Credit ranges from 20% to 35% of qualifying expenses
  • Higher percentages apply at lower income levels
  • Most higher-income taxpayers receive 20%
  • Example:
    • $6,000 of expenses ? 20% = $1,200 maximum credit
 
What income counts as “earned income”?
  • Wages (W-2 income)
  • Net self-employment income
  • Taxable disability pay (before minimum retirement age)
  • Investment income does NOT qualify
  • Pension income does NOT qualify
 
Do both spouses need earned income if married?
  • Yes, if filing jointly
  • Exception: If one spouse is a full-time student or disabled
    • Deemed earned income of $250 per month (one child)
    • $500 per month (two or more children)
  • Married filing separately generally cannot claim the credit
 
What information do I need from my care provider?
  • Provider’s name
  • Address
  • Tax ID number (SSN or EIN)
  • Total amount paid during the year, per provider, per child
 
Can I claim the credit if I don’t owe taxes?
  • No
  • The federal dependent care credit is nonrefundable
  • It can reduce tax liability to zero, but cannot create a refund
 
What if my child turns 13 during the year?
  • Only expenses incurred before the child’s 13th birthday qualify
 
Does this affect my state tax return?
  • Some states offer a separate dependent care credit
  • State rules may differ
  • Credit amounts and refundability vary by state
 
Can divorced or separated parents claim the credit?
  • The custodial parent (where the child lived more than half the year) may claim it
  • Even if the noncustodial parent claims the child as a dependent

​Updated 2/27/2026