Claiming the Child and Dependent Care Credit

If you have paid for the professional care of a disabled adult dependent, or if you have paid for childcare for a qualifying dependent child who was 12 years of age or younger, you are probably eligible to receive a significant tax credit – the Child and Dependent Care Credit. This tax credit can earn you – dollar for dollar – up to 35 percent of the expense of the care you paid for during the tax year.

If you are claiming the credit for child care you paid, the child must be qualified as your dependent, and must be 12 or younger – or have physical or mental disabilities making it impossible for him/her to care for him/herself if over the age of 12. If you are claiming the credit for adult dependent care, you must be able to show that the adult is incapable of self-care. You must also be able to prove that the care provided allowed you to work (for income) or to seek employment. If your employer provides dependent care benefits, the amount you claim for the credit must be reduced by the amount you received as an employment benefit.

To be eligible to claim the Child and Dependent Care Credit, the qualifying child or adult dependent must have lived in your home for over half the tax year, and you must have paid over half of the expenses involved in maintaining a home for him or her. In some cases, with divorced parents, the non-custodial parent may have a right to claim a child as a dependent. In this case, the custodial parent may still claim the Child Care Credit, even without claiming the child as a dependent.

It is necessary for the provider of the childcare or adult care services to meet specific qualifications, as well. They may not be a dependent, and you must provide their information -- name, business name (if they have one), address, and tax ID number (SSN or EIN) – on IRS Form 2441.