If your child, or disabled dependant was enrolled in day care facility or somewhere similar so you could work, you're most likely eligible to claim some of the expenses as credit towards this year's tax bill.
• Describes how the child care tax credit works
• Lists the basic qualifications required
• Explains how to claim this credit electronically or with a paper return
Make claiming tax credits easier
Do your taxes online, for free: H&R Block allows you to work on your return for free, until you file. Work on your federal, state, and small business taxes, and pay nothing until you are satisfied with your return. Start now.
Avoid costly mistakes, and take advantage of all possible credits and deductions. (Claiming tax credits is really easy with H&R Block).
The child care tax credit is intended to help individuals whose employment makes child care essential. If you have a child(ren), you know the cost of care can be a huge chunk of your family's budget.
This credit is designed to recover some of those expenses at tax time.
Likewise, the credit for dependent care allows for people with disabled dependents to recoup a portion of the costs.
The allowable amount for this credit is limited to a maximum of $3,000 for one child (or dependant) and $6,000 for more than one.
Are you eligible to claim this credit?
To be eligible, you must meet some preliminary requirements. For the child care credit:
• You (and your spouse, if you are married) must work. • The child cannot be older than 13. • The child care provider can not be a member of your household.
For the dependent care credit:
• You (and your spouse, it you are married) must work. • The dependent can not be capable of self-care.
There are additional limitations in claiming the federal child tax care credits: If the total yearly cost for child care or your total earned income were less than the maximum allowance, the amount you may claim is reduced. When totaling your yearly expenses for child care, only include wages to the care provider and any payroll taxes you paid. The IRS does not consider other costs to be expenses.
Once you determine the smallest of these three figures - your earned income, your child care expenses, or the maximum credit allowance - only a percentage of that amount is actually claimed as your child care tax credit. Depending on your income, you can claim anywhere from 20%-35% of your child or disabled dependent care costs as a tax credit.
Sidebar Doing your taxes online makes all the calculations and rule-checking much easier. You can e-file online with H&R Block , where you can choose to have a tax professional help you with your return. Plus, you will be able to work on your return for free, until you actually decide to file.
How to claim this credit
To claim the credit, your tax return must include the name of the care provider, the provider's address and identification number (which can either be a social security or EIN number) and the total amount paid for care during the tax year. If you are unsure of any of the information, request that your child care provider complete Form W-10. Once complete, this form will list all the crucial information.
To claim the credit, the name and social security number for each child or disabled dependent is also required.
All information should be recorded on IRS Form 2441 if you file a 1040, or Schedule 2 if you file a 1040A, and sent in with your tax return. (With e-filing this form is completed for you electronically)
Related IRS publications
You can get more information about the credit for disabled dependent and child care directly from the IRS, in the form of IRS Publication 503
If you file a paper tax return, you need to attach IRS Form 2441 with your 1040, or if you file a 1040A, you need to attach Schedule 2
If you e-file, this will all be finished for you automatically.
Note: you will need an Adobe Acrobat Reader to view these publications, which you can get here. (But you probably already have it.)
Filing your taxes is easy
Use H&R Block this year, and you are guaranteed the biggest refund, the most accurate return, and the piece of mind of knowing that the IRS has received your filing.
Choose from the free program for simple returns, to the deluxe and premier products for those filing a full 1040 with schedules C/D and other forms.
You can have your return reviewed by a tax pro, too!