Tax Breaks for Dependent Care Expenses

The Child and Dependent Care Tax Credit

The Child and Dependent Care Tax Credit, also known as CDCTC, is a credit that is available for working taxpayers who spend money caring for children, incapacitated spouses, or adult dependents. It allows up to $3,000 in dependent care expenses to be claimed for one dependent and up to $6,000 for two dependents. If eligible, one should definitely take advantage of this credit. However, since the Child and Dependent Care Tax Credit is nonrefundable if you do not owe any federal income taxes you will not benefit from claiming the credit.

Things to Keep in Mind about the CDCTC

  • The reason that the care was provided was so you or your spouse could work or look for work.
  • You cannot file married filing separately and be eligible for the credit.
  • The person who you are claiming must have had their support provided by you for more than six months out of the year.
  • The credit covers up to 35% of your expenses. However, the exact amount is determined by your adjusted gross income.

Closing Thoughts

If you qualify, you should take advantage of the Child and Dependent Care Tax Credit. It may not come to you in the form of a refund yet lowering the amount of federal taxes that you owe is even better than receiving a tax refund.

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